03/05/2018 - 12:38

ATO dissects business tax take

03/05/2018 - 12:38

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Less than 1 per cent of businesses paid half of Australia’s corporate tax take in the year to June 2016, according to ATO data, while the financial services and resources industries were the biggest contributors.

ATO dissects business tax take
The resources industry paid $5.8 billion in company tax.

Less than 1 per cent of businesses paid half of Australia’s corporate tax take in the year to June 2016, according to ATO data, while the financial services and resources industries were the biggest contributors.

The Australian Taxation Office’s 2016 financial year statistics showed a group of just 717 very large resident companies paid $35.8 billion in corporate tax.

Overall company tax collection was $66.7 billion from around 400,000 taxable entities.

Those businesses categorised as very large companies earned profits of about $131.4 billion, implying an effective average corporate tax rate of 27.2 per cent.

That is slightly less than the statutory rate of 30 per cent for large businesses, with tax deductions from carried-over losses and for capital investment reducing payments.

Total profits across all taxable, resident entities were $247 billion, implying an effective average company tax rate of about 27 per cent overall.

To put that into perspective, a paper by PwC drafted for the alliance for competitive taxation cited 2015 research by the European Commission finding the effective average company tax rate was 21.1 per cent across about 30 relevant jurisdictions.

Looking at the data by industry, financial services businesses including banks and life insurance providers paid about $25.9 billion in company tax on profits of around $92 billion.

Mining and energy players paid $5.8 billion in company tax.

Among other industries, construction business paid $4 billion, retail traders paid $3.8 billion while arts and recreational companies paid about $500 million.

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