Australia

Details

  • Service: Tax, Corporate Tax, Topics, Tax Reform, Resource Taxation
  • Industry: Energy & Natural Resources, Mining, Oil & Gas
  • Type: Business and industry issue, Regulatory update
  • Date: 15/07/2013

Tax Insights

KPMG's analysis of tax issues and developments.

David Drummond

David Drummond
National Leader, Tax Management Consulting

+61 2 9335 8695

ddrummond@kpmg.com.au

Why isn't your income taxable? 

by David Drummond, Corporate Tax Specialist

Late last month, the Tax Laws Amendment (2013 Measures No. 2) Bill 2013 passed through Parliament and received Royal Assent. The new legislation will require the Commissioner to disclose certain information from the tax return for companies with a “reported total income” of greater than $100 million (and those with a Petroleum Resource Rent Tax (PRRT) or Minerals Resource Rent Tax (MRRT) liability).

This will apply from the 2013-14 year of income (or 1 July 2013 for MRRT and PRRT). The information is to be placed online and will be based on the information disclosed in the tax return comprising the entity’s name and Australian Business Number (ABN), the reported total income, the taxable income and the tax payable.  

 

Although actual passage of the Bill has not made the headlines quite so much as the initial proposal, eyes around the world have been watching developments here closely as the global debate on tax morality and the transparency of taxpayers continues to gather pace, including whether to specifically legislate for increased tax transparency, potentially on a country-by-country basis.

 

This emerging environment therefore demands understanding of the tax reputational and perception risks associated with the presence or absence of tax disclosures, in particular with new aggregate information to be published separately by the Australian Taxation Office (ATO). This new data is likely to become a first port of call for the media, pressure groups and the public alike, all keen to make determinations as to whether organisations and the brands attached to them are paying their 'fair share.'

 

It is open to question whether the common divergence between reporting of economic outcomes for book and tax and appropriateness of that will be lost on users of this new lens through which to view the tax payments of organisations. It will also be interesting to see whether the ATO can maintain its current welcome communication to lower consequence and lower risk taxpayers that, having assessed the tax return of an organisation under the Risk Differentiation framework,further compliance activity is not warranted.

 

Organisations falling into scope of the new disclosures are therefore best advised to understand the data to be published on their affairs. They can then determine how a user of this information may seek to interpret  the relationship between gross income and tax payments and be best placed to prepare and, if appropriate, publish additional data to proactively fill that information gap with the facts if others come to a different conclusion.

 

This is already occurring on a voluntary basis in the extractive industries globally begging whether organisations will have to get on the front foot to combat misinterpretation and misuse of the information to be published by the ATO whether such reporting is mandated or not.

 

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