CA ANZ Australian Tax Leader Michael Croker says with over $9 billion collected in 2016-17, there has been a number of major tax policy and administrative changes made since then to address the $770 million (7.7%) gap.
"More anti-avoidance rules have been enacted, more data than ever before is flowing into the ATO and large private companies now have compliance obligations akin to those which apply to listed companies and multinationals," said Croker.
"The ATO also just launched a 'justified trust' program which will review, and if necessary, audit large companies."
"Many Chartered Accountants are flat out helping their large private companies every step of the way to cope with the extra tax compliance."
"The difference between large public and private companies is that typically, the structure of private companies reflect the financial goals of the individuals who ultimately control them and associated family members and entities."
"Tax gap analysis is complicated by the fact that tax may be paid in a myriad of entities within the structure, and at an individual level."
Mr Croker also cautioned against using the ATO tax gap figure to impugn the reputations of leading Australians who control large private groups as they are typically entrepreneurs who take risks, build businesses and provide jobs
Croker believes there is more to do on the company tax policy front, questioning how long Australia's 30% 'large' company tax rate – high by world standards – can last in a competitive global economy.
"Australia is dangerously over-reliant on the company tax paid by comparatively few 'large' companies. We need more home-grown companies which make it big in Australia and strut the world stage.
"While dividend imputation makes it attractive to pay tax here and distribute franked dividends to Australian shareholders, OECD data1 indicates Australia is now a high company tax rate country compared to other developed countries. Wealthy Australians also pay comparatively high personal rates2.
In difficult economic conditions like now we really need the private sector to invest and create jobs here and not 'over there'.
"Sooner rather than later, our leaders will hopefully reconsider Australia's long-term tax policy settings."
1. OECD, Statutory Corporate Income Tax Rates: https://stats.oecd.org/Index.aspx?QueryId=78166
2. Australia’s effective corporate tax rate is also high: https://stats.oecd.org/Index.aspx?DataSetCode=CTS_ETR
3. OECD, Central government personal income tax rates and thresholds: https://stats.oecd.org/index.aspx?DataSetCode=TABLE_I1
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