10/12/2020 - 15:26

WA delivers for feds with $16bn tax bill

10/12/2020 - 15:26

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Thirteen WA-linked resources businesses were among Australia’s 25 top corporate taxpayers, paying $16 billion between them.

BHP, Rio Tinto and Fortescue are among businesses with big operations in WA. Photo: Gabriel Oliveira

Thirteen WA-linked resources businesses were among Australia’s 25 top corporate taxpayers, paying $16 billion between them.

The two biggest payers of company tax in Australia were entities belonging to Rio Tinto and BHP, according to the latest Australian Taxation Office data, from the 2019 financial year.

Iron ore miner Fortescue Metals Group ranked sixth, with Wesfarmers in ninth position (see table).

The two aren’t directly comparable, as Fortescue solely earns revenue from WA iron ore, while Wesfarmers has interests outside resources and outside WA.

But the numbers provide a simple, top level guide as to the contribution of big resources players to federal government coffers.

Some businesses have more than one entity for tax purposes.

BHP Iron Ore (Jimblebar) entity ranks 10th in its own right after paying $867 million in company tax, on top of its parent company’s $4.2 billion.

Another example is Woodside Petroleum, which has three entities.

Burrup Facilities company paid $341 million of corporate tax, Burrup Train 1 paid $241 million, while parent entity Woodside Petroleum paid none.

That’s because the business earns its income from the two subsidiary entities, which pay tax effectively on its behalf.

Across the 13 businesses identified by Business News, taxable income totalled $59 billion.

That implies an average actual tax rate of 27.1 per cent.

About 760 entities paid no tax.

Reasons include businesses reporting losses, deductions of losses in previous years, or large capital investment spending which is not ordinarily considered in a business’s income statement.

An example would be Chevron, which reported taxable income of $900 million but would be able to claim depreciation deductions for its investments in Gorgon and Wheatstone.

ATO deputy commissioner Rebecca Saint said the 2,311 entities in the report paid more than 60 per cent of all corporate tax in Australia, with a total of $56.1 billion.

“Total income tax paid increased $3.8 billion from 2017-18, which can be attributed to the mining and resource sector and increases in commodity prices,” Ms Saint said. 

“All other sectors saw the first decline in income tax payable since the first report was published, partly reflecting the downturn in non-mining company profits during the 2018-19 financial year.

““The ATO takes steps to verify that losses in the large market are not created through contrived schemes, but actual losses that can be traced back to commercial operations.

“Companies that report sustained losses year-on-year face scrutiny from the Tax Avoidance Taskforce.

“The Taskforce and the Justified Trust program allow us to change behaviours and engage directly with the largest corporate taxpayers to assure their tax compliance. 

“The majority do the right thing and pay the right amount of tax, but we take firm action against companies that try to avoid their tax obligations.

“The Tax Avoidance Taskforce has proven very successful, contributing to the ATO raising a total of $19.8 billion in tax liabilities and collecting $11.2 billion from large public groups, multinational corporations, wealthy individuals, and private groups from 1 July 2016 to 30 September 2020.”

The federal government’s Multinational Anti-Avoidance Law had led to 44 businesses restructuring to properly recognise sales in Australia, she said.

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