Australia's corporate tax paid is concentrated in the largest corporations (see Figure 4 below), which is why we apply a significant degree of scrutiny to these taxpayers. We use the Action Differentiation Framework to apply resources efficiently, allocating them to priority focus areas where specific attention is required.
We engage with the largest corporations on an ongoing one-to-one basis to manage their compliance and assure their tax performance. For more information, see Top 100 engagement, Top 1,000 engagement and Top 500 engagement.
We have a high level of compliance coverage across the population with a focus on assuring that the right amount of tax has been paid. These programs seek to give the community confidence that Australia’s largest corporations are paying the right amount of tax.
Australia’s largest corporate entities tend to operate in segments of the economy characterised by a high degree of capital intensity and economies of scale. There are only 67 entities in the corporate transparency population with income of $5 billion or more.
Whilst these corporations represent only 2.7% of the population, they collectively pay about 59.9% of all income tax payable or $41.1 billion (see Figure 4). The majority of these large corporations are Australian public companies, and assurance over their tax compliance is covered by our Top 100 program.
Four out of 5 taxpayers in the Top 100 population have achieved either an overall high or medium level of assurance through our annual justified trust program. Justified trust builds and maintains community confidence that taxpayers are paying the right amount of tax.
Figure 4: Largest corporate entities in $5b and greater income segment
The large corporations account for 55.9% of the corporate transparency population. They are the highest population by count and paid 35.0% or $24.0 billion of total tax payable (see Figure 5).
Many corporations in this cohort are covered by the Top 1,000 program. Under this program, we aim to assure the tax outcomes of corporations which are not part of the Top 100 population and with income above $250 million once every four years. Where we identify areas of concern, they are addressed through our Next Actions Program.
Figure 5: Large corporate entities in $250m to $5b income segment
The medium corporations (those who earn less than $250 million) account for 41.4% of the corporate transparency population but paid only 5.1% of corporate income tax (see Figure 6).
We have risk based, and data and analytics programs to monitor the tax compliance of medium corporations.
Figure 6: Medium corporate entities in $100m to $250m income segment