Fast Lane: The scandal of big business tax dodging

Almost a third of Australia’s biggest businesses are paying less than 10% in corporate tax, according to a report released today.

The report, Who Pays For Our Common Wealth? Tax Practices of the ASX 200, found 84% of Australia’s top 200 businesses listed on the Australian Securities Exchange pay less than the 30% company tax rate.

James Hardie pays an effective rate of 0% tax, Sydney Airport 2% and the owners of Sydney’s Star Casino, Echo Entertainment, 5%, the report found.

Yet while the big end of town is busily dodging tax the Australian Tax Office is doing nothing.

There has been continued talk by the government and ATO about cracking down on these practices, but they seem at a loss as to how to go about it.

And as soon as there is even talk of an investigation the Business Council of Australia claims a crackdown would hamper competition. 

It’s all too hard and so rather than focusing on big business tax dodgers with their millions in tax havens the ATO keeps on pummeling small businesses.

The ATO charged $4.25 billion in penalties between mid-2011 and mid-2013 but “micro businesses” bore the brunt of this regime with penalties for the sector amounting to $1.4 billion, or 51% of total penalties.

SMEs were penalised $439.2 million over the period, making up 16% of all penalties imposed by the ATO.

This compares to the $525.9 million in penalties (19%) imposed on large businesses, and the $349.4 million (13%) imposed on individual taxpayers.

What’s even worse is that a large number of these penalties imposed on small and medium-size businesses are incorrect.

An investigation by the Inspector General of Taxation, Ali Noroozi, earlier this year found the ATO’s penalties were reduced by 25% over the three years as a result of ATO reversal decisions.

They are incorrect penalties which may have driven some small businesses to the wall or damaged the owner’s reputation.

Instead of scapegoating SMEs, the ATO should be focusing on those businesses at the top end of town who use top law and accountancy firms to create complicated structures and offshore havens to dodge, (sorry “minimise”) the tax they are paying.