Global Tax Alert | 4 April 2013

Australia's tax disclosure by large Australian businesses: disclosure items and business implications

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On 3 April 2013, Australia's Assistant Treasurer released a Treasury discussion paper on greater public disclosure of taxes paid by large businesses and resources businesses. Comments are invited by 24 April to enable the government to consider the feedback before they introduce legislation. Businesses need to consider the public profile issues of this proposal, and whether to respond to the paper.

The most significant proposal in the discussion paper relates to public reporting by the Australian Taxation Office (ATO) of certain business taxpayers' income tax, Minerals Resource Rent Tax (MRRT) and Petroleum Resource Rent Tax (PRRT).

Disclosure items

The ATO would be required to publicly disclose each year the items outlined below:

  • For large corporate tax entities with total income of $100 million or more: the business name and Australian Business Number (ABN), total income, their taxable income, and income tax payable. Reporting of income tax would start in relation to the income year 2013/14.
  • For any entity with MRRT or PRRT payable in a year: the business name, ABN and the business' MRRT and PRRT payable. Reporting would start from the first MRRT or PRRT year of tax starting on or after 1 July 2013.
  • Two further proposals involve publishing the collections for each Commonwealth tax, and monitoring and improving the information sharing among Commonwealth agencies including the Foreign Investment Review Board.
  • Businesses need to anticipate submissions from some groups urging greater disclosures than proposed in the discussion paper. For example various groups seek public disclosures of businesses' taxes paid in every country.

Implications for businesses

The implications will vary for Australian-listed entities, privately held large businesses and Australian subsidiaries of foreign-owned multinational groups. They will depend also on the cash tax profiles of the large businesses.

Large businesses should consider the proposals and also public perception issues which might arise from the disclosures. For example if businesses have low cash tax payable, due to factors such as capital allowances, carry forward tax losses or R&D deductions, they might need to prepare for queries raised without full information. As well, businesses might be concerned that the public will not see the full picture of their taxes paid in addition to income tax, MRRT and PRRT, much less their total social contribution. Such queries about taxes might arise, if they do not already, from analysts, the public or social welfare groups.

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. CM3330