RSM Australia

Company taxpayers: are you ready for the public disclosure of your tax data?

Since tax was first collected, a fundamental feature of tax law has been the unconditional secrecy surrounding taxpayer data. In Australia that position changed in June 2013 when Australia’s tax secrecy laws were amended, directing the ATO to publicly report certain large company tax data.


Start date and implications


The first disclosure of taxpayer data is expected to be uploaded to the data.gov.au website in late November/early December 2015. This data will be extracted from taxpayer returns for the 2013-2014 income year. The ATO will provide affected companies with draft details in September 2015, permitting any necessary corrections to be made ahead of general publication.


The financial press and certain lobby groups can be expected to closely scrutinise the data. In fact one of the key justifications for introducing this disclosure was to 'provide more information to inform public debate about tax policy, particularly in relation to the corporate tax system'. 


Taxpayers with low effective tax rates may want to consider pre-emptive statements and strategies in anticipation of media enquiry.


Who and what is targeted?


Affected taxpayers are all ‘corporate tax entities’ (companies and entities taxed as companies) with total income exceeding $100m (large companies). All companies are included: domestic companies, whether listed, public unlisted or private, and non-Australian companies lodging Australian tax returns.


However, private companies should watch for possible relief – see below.


The $100m threshold is determined by reference to the ‘total income’ line (label 6-S) in the company’s tax return (or on the head company’s tax return for tax consolidated groups).


Certain specific income tax data will be published for large companies, whilst details of all mineral resource rent tax (MRRT) and petroleum resource rent tax (PRRT) payments will be published.


Income tax


The company income tax data to be reported is expected to take the following form: 





Name

ABN

Total income

Taxable income

Tax payable

XYZ Pty Ltd

00 123 456 789

$500,000,000

$450,000,000

$135,000,000

ABC Pty Ltd

00 234 567 890

$110,000,000

-

-

 


(In the example, the taxable income and tax payable of ABC Pty Ltd would not be reported if the company incurred a tax loss for the reporting year of income.)


No other information will be released by the ATO. This means readers will be forced to draw their conclusions about the reasons behind a low effective tax rate without access to all the information. For companies anticipating a low effective tax rate, it will be critical to have to hand information which balances the minimalist ATO reporting and explains the underlying commercial reasons for the lower tax rate, eg., foreign sourced income, CFC income, accelerated depreciation rates, tax losses, R&D tax incentives etc.


MRRT/PRRT


For MRRT/PRRT taxpayers, there is no threshold – all payment details will be disclosed. The MRRT and PRRT information to be reported is expected to take the following form:




Name ABN MRRT/PRRT payable
XYZ Pty Ltd 00 123 456 789 $20,000,000

Proposed exclusion of private companies


The government proposes to amend the transparency rules and exclude from disclosure the data of Australian private resident companies and private company tax consolidated groups. A treasury consultation on exposure draft legislation closed in early July 2015, and the matter is now with the government for final decision.


The proposed exclusion of private companies is in line with the original intent of the transparency amendments, according to the Commissioner of Taxation, but the proposed amendments have attracted much adverse media commentary which calls for greater transparency, not less.


(Note: If private companies are excluded, it is only those which are 'private' by reference to tax law, not all company law 'proprietary limited' companies.)


Andrew Leigh’s private members bill


In line with a push for greater tax transparency, the ALP Shadow Assistant Treasurer, Dr Andrew Leigh, introduced a private members bill to roll-back the start date of the transparency measures by 12 months, seeking publication of the tax data for the 2012-2013 year. This bill was not enacted, and has now been removed from the parliamentary notice paper. 


More 'transparency' on the horizon…


Independently, the ATO is in the process of developing a methodology to determine the 'effective Australia tax borne' by Australian corporate taxpayers.  


A pilot study of ten corporate taxpayers has been recently announced by the ATO, and whilst the methodology has not been detailed in the recent communique, it will no doubt be a refined version of that which was made public earlier this year in connection with the Senate Economics Committee corporate tax hearings.


Action


Large corporate and multinational tax practices are ‘flavour of the month’, based on the last 24 months of media reporting. Large companies who face public disclosure of their tax data should understand the likely figures that will be released, and consider the ‘message’ those figures will deliver. For those companies with a low effective tax rate, be prepared with information which explains the true position.

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