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  • Demographics of large corporate groups

    Large corporate groups make a significant contribution to the Australian economy and play a critical role in the tax system. They are important in creating community confidence in our tax system. Confidence is gained directly by their tax contribution, and indirectly, because their compliance underpins willing participation in other taxpayer segments.

    Definition of a large corporate group

    We define a large corporate group as one with a group turnover greater than $250 million. There are approximately 1,470 large corporate groups with over 5,300 income tax reporting entities in Australia. This represents around 27,500 active companies. These groups include Australian public, Australian private and majority foreign-owned businesses.

    Large corporate groups – ownership, 2016–17

    1,470 corporate groups: 46% (680) Majority foreign-owned, 31% (455) Australian - private, 23% (335) Australian - public.

    Large corporate groups – total business income, 2016–17

    $1.8 trillion total business income: 36% ($656 billion) Majority foreign-owned, 54% ($991 billion) Australian - public, 10% ($175 billion) Australian - private.

    Large corporate groups – total profits, 2016–17

    $184 billion total profits: 75% ($138 billion) Australian - public, 18% ($34 billion) Majority foreign-owned, 7% ($12 billion) Australian - private.

    How much tax large corporate groups pay

    The amount of tax payable by large corporate groups has fluctuated over time. This generally reflects changes in economic conditions that impact on the largest taxpayers, in particular, fluctuations in the Australian dollar (AUD) price of commodities such as iron ore. This can be seen in the tax paid by diversified miners and other energy and resources groups.

    Large corporate groups – contribution to tax revenue, 2011–12 to 2016–17

    Between 2011-12 to 2016-17, Major Banks and Diversified Miners contributed the most to income tax reported by large corporate groups. The largest fluctuation in income tax reported was by Diversified Miners.

    The number of large corporate groups in the Australian tax system is comparatively small, yet the impact they have on revenue is significant.

    Large corporate groups – contribution to tax revenue, 2016–17

    There are almost 1,470 corporate groups each with a turnover of above $250 million who collectively generate: $1.8 trillion in total business income and $44.2 billion of the $74.0 billion in corporate income tax reported.

    Tax contribution from these 1,470 large corporate groups is equivalent to around 60% of all corporate income tax reported and 15% of total ATO tax collections.

    The largest corporate groups contribute a significant proportion to overall corporate income tax collections.

    Large corporate groups – concentration of tax contribution, 2016–17

    The largest 10 corporate groups reported $21.8 billion or 29% of all corporate income tax reported.

    The largest 100 corporate groups reported $30.9 billion or 42% of all corporate income tax reported.

    While Australian public businesses only make up 23% of these 1,470 large corporate groups, they pay 70% of the corporate income tax payable, as against 54% of the gross income, for this group. This is driven by the significant profits earned by a relatively small number of very large Australian-owned groups. Once these companies are excluded, the overall performance of other Australian public companies, private companies and majority foreign-owned companies are relatively similar.

    Large corporate groups – ownership and tax contribution, 2016–17

    $44.2 billion corporate income tax reported: 73% ($32 billion) Australian - public, 21% ($9 billion) Majority foreign-owned, 6% ($3 billion) Australian - private.

    Large corporate groups are involved in a diverse range of sectors across the economy. Those in the Banking, finance and investment and Mining, energy and water industries number less than one-quarter (22%) of all large corporate groups, earn one-third (33%) of business income but contribute almost two-thirds (61%) of large corporate income tax.

    Large corporate groups – industry demographics (number), 2016–17

    1,470 corporate groups: 53% Wholesale, retail and services, 23% Manufacturing, construction and agriculture, 12% Banking, finance and investment, 10% Mining, energy and water, 2% Insurance.

    Large corporate groups – industry demographics (business income), 2016–17

    $1.8 trillion total business income: 44% Wholesale, retail and services, 19% Mining, energy and water, 16% Manufacturing, construction and agriculture, 15% Banking, finance and investment, 6% Insurance.

    Large corporate groups – industry demographics (tax reported), 2016–17

    $44.2 billion income tax reported: 34% Banking, finance and investment, 27% Mining, energy and water, 26% Wholesale, retail and services, 7% Manufacturing, construction and agriculture, 6% Insurance.

    Last modified: 13 Dec 2018QC 53277