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 1,000 engagement and Top 500 engagement.
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 the Boards, the ATO and the community confidence 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 78 entities in the corporate transparency population with income of $5 billion or more.
While these corporations represent only 2.9% of the population, they collectively pay about 57.0% all corporate income tax payable for the corporate tax transparency population or $47.8 billion (see Figure 4). 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, 4 out of 5 taxpayers have achieved either an overall high or medium level of assurance through our justified trust program. We have high levels of confidence that these businesses are meeting their legal tax obligations, or we know why they aren't and are taking action.
Figure 4: Largest corporate entities in $5 billion and greater income segment
Large corporations
The large corporations account for 1,533 entities or 56.5% of the corporate transparency population. They are the highest population by count and paid 38.1% or $31.9 billion of all corporate income tax payable for the corporate tax transparency population (see Figure 5).
Many corporations in this cohort are covered by the Top 1,000 program. Under this program, we aim to assure the tax outcomes of corporations which are not part of the Top 100 population and with income above $250 million once every 4 years. Where we identify areas of concern, they are addressed through our Next Actions Program.
Figure 5: Large corporate entities in $250 million to $5 billion income segment
Medium corporations
The medium corporations (those that earn less than $250 million) account for 1,102 entities or 40.6% of the corporate transparency population but paid only 4.9% of corporate 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 program. Part of the Tax Avoidance Taskforce, this compliance program uses sophisticated data and analytics programs to monitor and identify tax risk of medium corporations.
Figure 6: Medium corporate entities in $100 million to $250 million income segment