In a win for the privacy of most Australian-owned private companies, the federal government has passed the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Act 2015 (Cth) and the Tax Laws Amendment (Combating Multination Tax Avoidance) Act 2015 (Cth) (Acts), which amends section 3C of the Taxation Administration Act 1953 (Cth) (Income Tax Transparency Laws). The end result of this amendment is the exemption of Australian-owned private companies who have a total income of less than $200,000,000 from the mandatory public disclosure requirements of their income and tax data.
What are the Income Tax Transparency Laws?
The Income Tax Transparency Laws were implemented to provide a specific exception to the long-standing policy of protecting taxpayers’ confidentiality by imposing a duty on the Commissioner of Taxation (Commissioner) to publish certain tax information of corporate tax entities that report total annual income of $100,000,000 or more.
The previous government provided the following justifications for implementing the Income Tax Transparency Laws:
- the base erosion and profit shifting by multinational entities is a concern for the Group of Twenty and the Organisation for Economic Cooperation and Development;
- the laws would discourage aggressive tax practices; and
- the laws would inform public debate about corporate tax policy.
The Income Tax Transparency Laws apply from the 2013/2014 income years and require the Commissioner to publish the following information reported in affected taxpayers’ income tax returns:
- name and Australian Business Number;
- total income;
- taxable income or net income; and
- income tax payable.
How do the Acts amend the Income Tax Transparency Laws?
The Acts amend the Income Tax Transparency Laws to exempt Australian-owned private companies who have a total income of less than $200,000,000 from the disclosure requirements. The exemption will only be available to companies that satisfy all of the following conditions:
- the company must be an Australian resident private company with a total income of less than $200,000,000;
- the company must not be the wholly-owned subsidiary of a foreign corporate group; and
- the company must not have a level of foreign shareholding greater than 50 per cent.
Taxpayers that will continue to be subject to the Income Tax Transparency Laws
The Commissioner is now only required to publish the tax information for the following types of corporate taxpayers:
- report total income of more than $100,000,000 and who are:
- companies that are the subsidiaries of an Australian resident publicly listed company;
- publicly listed companies;
- companies that are the members of a wholly-owned group that has a foreign resident ultimate holding company; and
- companies that have a level of foreign shareholder that exceeds 50%; or
- Australian resident private company that has total income equal to or exceeding $200,000,000.
Reporting under the Income Tax Transparency Laws
On 22 March 2016, the Commissioner published the first data set under the Income Tax Transparency Laws for the 2013/2014 income tax year. A summary of the data set can be accessed here.