Understand tax compliance in Australia
An important feature of the Australian tax system is that the details of income earned and taxes paid by taxpayers are kept confidential. This applies for both people and entities. We believe this confidentiality supports full and honest disclosure to us.
However, an interested person can use a range of tools to better understand a company’s tax position. New data sources are available to help the community understand more about the tax compliance of large corporate groups.
We encourage community enquiries. These support an informed debate about tax compliance in Australia. Informed debate can balance speculation about low or no tax paid by some corporate groups. It can also address concern about non-compliance by the large corporate groups population in general.
Sources of information
Relevant sources of information about a company’s tax position include:
- reports prepared by the corporate group itself, especially reports written under the voluntary tax transparency code
- financial reports prepared by the corporate group and lodged, directly or indirectly, with the corporate regulator, ASIC
- our annual publication of key financial and tax data relevant to large corporate groups under the corporate tax transparency measure
- informed analysis and media commentary of particular corporate groups or industries including
- analysis of annual reports prepared by a corporate group in Australia
- reports filed by the overseas headquarters of a multinational with operations in Australia.
How large corporate groups are taxed
In looking at the tax paid by a particular large corporate group, it is important to remember:
- income tax isn’t paid on gross income, it's paid on taxable income, meaning they may pay less or no tax in subsequent years
- even very large corporate groups sometimes make losses that may mean they don’t pay tax in that year and, subject to integrity provisions in the law, they can carry forward and claim these as a tax deduction in future years
- Australia generally doesn’t tax the offshore profits of corporate groups where they are comparably taxed overseas
- the profits of businesses run through trusts are usually taxed at the investor level, not the trust level.
Voluntary tax transparency code
We encourage large corporate groups to adopt the voluntary tax transparency code (the Code). This includes entities treated as companies for Australian tax purposes and foreign multinationals with operations in Australia.
The Code was developed by the Board of Taxation and endorsed by the Australian Government in the 2015–16 federal Budget. It's designed to encourage greater transparency within the corporate sector, particularly by multinationals. It will improve the community’s understanding of the corporate sector’s compliance with Australia’s tax laws.
We're encouraged by the number of corporates volunteering to produce tax performance reports: By 30 September 2023:
- over 106 corporates published reports for 2021–22
- over 16 published to date for 2022–23.
We believe this will support more informed community debate about the tax system.
The first Voluntary Tax Transparency Code reportExternal Link for 2015–16 was published on data.gov.au in September 2016. It is updated as we receive more reports from businesses and currently includes 7 years of data. Over 210 corporates have become signatories to the Code.
Requirement to lodge general purpose financial statements
Most large corporates file detailed accounts with ASIC. These general purpose financial statements (GPFS) provide some tax payment details, including:
- the amount they expect to pay as tax liabilities
- a tax note explaining material tax adjustments, for example, profits and dividends or both from a foreign subsidiary may be exempt for income tax purposes, but treated as income in the accounts
- any amended assessment received, subject to principles of materiality
- information on substantial tax disputes, where the reporting entity has to disclose contingent liabilities under the Corporations Act 2001.
Some large global entities with Australian operations may not have been required to provide full GPFS to ASIC. Sometimes they've been able to lodge special purpose financial statements. Separately, grandfathering provisions provided exemptions from filing GPFS with ASIC for some Australian large private companies.
However, recent changes made to legislation means these companies will no longer be exempt from lodging financial statements with ASIC. The exemption now only applies to financial years ending on or before 9 August 2022 when the Act received royal assent.
For income years beginning on or after 1 July 2016, legislation now requires significant global entities to lodge GPFS with us if they don’t already provide them to ASIC. We pass these to ASICExternal Link and they make them public in their document register.
This measure increases the transparency of large multinational companies operating in Australia. Since its introduction, we've sent over 14,000 GPFS to ASIC.
Corporate transparency report
We publish limited tax details of certain large corporate taxpayers in accordance with tax returns as lodged. This is part of a global push to improve transparency and inform public debate about tax policy.
The law requires us to publish this information each year. We also provide supporting commentary to give context to the data and help users understand the tax adjustments that may be relevant in arriving at the taxable income. Importantly, this data doesn't get updated for subsequent ATO-initiated amendments to the returns lodged.
The information published is drawn from tax return labels and covers:
- total income
- taxable income
- tax payable
- petroleum resource rent tax (PRRT) payable.
Many companies prepare additional information available to the public that provides context to the data we publish.
We released the 2021-22 Report of entity tax information in November 2023, published on data.gov.au
For more information, see:
- Corporate Tax TransparencyExternal Link on data.gov.au, and
- Report of entity tax information
Public Country-by-Country reporting
Public Country-by-Country (CBC) reporting requires certain large multinationals to report specific tax information on a CBC basis.
Public CBC reports provide transparency to the public. This enables investors and the public to compare entity tax disclosures, to better assess whether a Public CBC reporting parent’s economic presence in a jurisdiction aligns with the amount of tax they pay in that jurisdiction.
For Australia and specified jurisdictions determined by the Minister, particular information must be published on a CBC basis.
For all other jurisdictions the CBC reporting group operates in, the Public CBC reporting parent has a choice to publish that same information on either a CBC basis or an aggregated basis.
The Minister's determination of jurisdictions for the purpose of Public CBC reporting is provided by legislative instrument. A list of specified jurisdictions will be made available once a Ministerial determination is made.
The ATO will facilitate publication of the report provided by the Public CBC reporting parent, on the Australian government website data.gov.au.
Public CBC reporting includes disclosures on:
- the revenues, profits and taxes of the global group
- the activities of the global group
- an entity's international related party dealings.
The Public CBC reporting regime applies for reporting periods commencing from 1 July 2024. The Public CBC report is due within 12 months after the end of the relevant reporting period. We expect the first reports to be published in late 2026.
Other sources of information
Some media and professional analysts study corporations and/or industries. These reports sometimes draw on detailed financial updates filed by multinational enterprises in their home jurisdiction. They can indicate taxes paid globally and sometimes taxes paid here in Australia.
Other analyses of a corporate group’s financial and tax position might arise upon a significant or material event. This may include a merger, acquisition or takeover proposal, or a major change in their financial position following receipt of an amended tax assessment.