How tax transparency applies
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 500 engagement and Top 1,000 engagement. Large and medium corporations not covered by these engagement programs are treated using a risk-based approach, which includes periodic one-to-one tailored engagement or other compliance engagement through the Medium public and multinational business engagement program.
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 confidence to the corporation's boards, the ATO and the community that Australia’s largest corporations are paying the right amount of tax.
Largest corporations
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 95 entities in the corporate transparency population with an income of $5 billion or more.
While these corporations represent only 2.3% of the population, they collectively pay about 59.3% ($56.8 billion) of corporate income tax payable for the Corporate tax transparency population. The majority of these large corporations are Australian public companies, and assurance over their tax compliance is covered by our Top 100 program.
In the Top 100 population, which includes Australia's largest public and multinational businesses, 83% of taxpayers have achieved either an overall high or medium level of assurance through our justified trust program. We have confidence that these businesses are meeting their Australian tax obligations, or we know why they are or aren't taking action.
Figure 4: Largest corporate entities in the $5 billion and greater income segment, 2023–24
Large corporations
The large corporations account for 1,780 entities or 43.3% of the corporate transparency population and pay 33.5% or $32.1 billion of all corporate income tax payable for the Corporate tax transparency population (see Figure 5).
Most of the corporations in this cohort are covered by the Top 1,000 program, with 89% of taxpayers achieving high or medium levels of assurance. Under this program, we aim to assure the tax outcomes of Australia's largest corporations which are not part of the Top 100 population once every 4 years. Where we identify areas of concern, they are addressed through our Next Actions Program.
Some corporations in this cohort are part of privately owned wealthy groups. Our tax performance programs for these groups are tailored to 3 key segments. Most of these private groups are from the Top 500 and medium and emerging private groups segments.
For corporations covered by the Top 500 tax performance program, we engage directly with these groups from year to year to establish a high level of assurance that they are paying the right amount of tax.
Figure 5: Large corporate entities in the $250 million to $5 billion income segment, 2023–24
Medium corporations
The medium corporations (those that earn less than $250 million) is the largest income segment in the population (by count) after the inclusion of Australian private entities with income between $100 million and $200 million. They account for 2,235 entities or 54.4% of the corporate transparency population but paid only 7.2% of all corporate income tax payable for the Corporate tax transparency population (see Figure 6).
Many of these entities are covered by our medium and emerging compliance programs. Part of the Tax Avoidance Taskforce, these compliance programs use sophisticated data and analytics programs to monitor and identify tax risk of medium corporations.
The medium and emerging programs cover public and multinational businesses and private groups not covered by our justified trust programs. We use enhanced data and analytics to understand the operating environment of these groups, identify and address tax risks and design tailored approaches to mitigate those risks. Where we identity a higher risk or emerging issue, we engage with these taxpayers to support them in meeting their tax obligations. See Medium public and multinational business engagement program and Medium and emerging private groups tax performance program for more information.
Figure 6: Medium corporate entities in the $100 million to $250 million income segment, 2023–24