Global Tax Alert | 30 May 2013
Australia legislates for public reporting of large companies' incomes and taxes
On 29 May 2013, the Australian government introduced a tax bill into parliament to require the Australian Taxation Office (ATO) to publicly report, in relation to companies with annual income of AUD100 million or more, their gross income, taxable income and tax payable. The Bill also includes other previously-announced measures.
The public reporting applies to public and private companies, those listed on stock markets or Australian subsidiaries of global groups. The reporting will lead to significant interest from the public and analysts.
Boards and management of affected companies need to consider their response, including possible additional proactive disclosures ahead of the ATO reporting, possibly in their reporting in relation to the current financial year.
Reporting requirements and timetable
The reporting rules follow an earlier government announcement and Treasury discussion paper,1 and have not been modified in any material way after submissions made.
The Bill will, when enacted, require the ATO to disclose:
- • For companies and corporate tax entities with income of $100 million or more reported in their income tax return: their Australian income, taxable income and tax payable commencing with details from the 2013-2014 income year;
- • For companies and corporate tax entities liable to pay Minerals Resources Rent Tax (MRRT) or Petroleum Resources Rent Tax (PRRT): their MRRT or PRRT payable commencing with details from the 2013-2014 MRRT year or equivalent for PRRT purposes.
For Australian subsidiaries of global groups with a 31 December 2013 balancing date in lieu of the 2013-2014 income year, their current year income will be subject to the reporting rules.
The Explanatory Memorandum states that it is envisaged that the ATO will publish one annual report encompassing all relevant taxpayers, likely to be released several months after the date for the lodgement of the final company income tax returns for an income year. The first report is thus likely to be in late 2015.
Once the information is published, it will then be open to investment analysts, various organizations and the public at large to review that information.
This reporting of tax is in addition to various global moves for additional corporate disclosures of their tax position as part of their own ongoing tax disclosure obligations. For example the disclosure requirements by companies in the resources sector are evolving. As well the European Council is considering further disclosure proposals by large companies.
The reporting by the ATO will lead to questions to some companies from the media and the public and (for listed companies) analysts and some shareholders arising from the reporting.
Companies, including the Australian subsidiaries of global groups, should consider in the near future the forward impact of the public reporting and consider a fuller voluntary explanation of their tax profile to combat any misconceptions which may be drawn from the limited mandatory disclosure. Otherwise companies may risk ongoing reputational and brand damage. Some widely held Australian companies might consider initiatives in the 2013 financial reporting and AGM season.
Other tax bill provisions
Other measures in the 29 May bill include:
- • Monthly Pay As You Go (PAYG) instalments for larger companies, applicable initially to corporate tax entities having an annual turnover of AUD1 billion or more, with monthly PAYG payments from 1 January 2014;
- • Incentives for designated infrastructure projects, to uplift their carry forward tax losses and exempt them from various tax loss rules;
- • Petroleum resource rent tax amendments following the Esso Australia Resources case
- • A regulatory framework for tax (financial) advice services; and
- • Removal of the CGT discount for foreign resident and temporary resident individuals.
1. See EY Global Tax Alert, Australia's tax disclosure by large Australian tax businesses: disclosure items and business implications, dated 4 April 2013.
For additional information with respect to this Alert, please contact the following:
EY (Australia), Sydney
- • Daryn Moore
+61 2 9248 5538
EY (Australia), Melbourne
- • Peter Janetzki
+61 3 8650 7525
EY (Australia), Brisbane
- • Paul Laxon
+61 7 3243 3735
EY (Australia), Adelaide
- • Janet Finlay
+61 8 8417 1717
EY (Australia), Perth
- • Craig Robson
+61 8 9429 2271
Ernst & Young LLP, Australian Tax Desk, New York
- • Michael Anderson
+1 212 773 5280
EYG no. CM3482