Eliza Bavin* says the ATO has defended itself against Aussies who think big corporations are dodging taxes.
The Australian Taxation Office (ATO) has shed light on a common misconception about large companies paying their fair share of tax.
In a speech to the 2023 OECD Tax Group Conference, ATO second commissioner Jeremy Hirschhorn said it was concerning Aussies felt the ATO wasn’t holding large corporations to account for their taxes.
“Despite the strength of Australia’s corporate tax system and world-leading levels of tax compliance, there is still work to do to build confidence in the tax system,” Hirschhorn said.
“Our latest community perception survey shows that only 27 per cent of respondents believe big business pays the correct amount of tax.”
In fact, in a Reddit post on AusFinance, Aussies were asked how they felt about the ATO as an organisation.
While most of the feedback seemed positive, many users said they were disappointed the ATO wasn’t more tough on big business.
“It’s disappointing how much time they spend on individual taxes when there are a lot of large companies using questionable tactics to pay minimal taxes,” one user wrote.
In response, another user questioned the narrative saying: “I’m not sure why this is repeated so often when it’s simply false.”
The most recent annual tax gap findings from the ATO revealed the gap for large corporations was just 4.2 per cent.
For medium-sized businesses, it was 7 per cent and for small businesses, it was even higher at 11.2 per cent.
“While using the tax gap to inform strategy and resources allocation is important, what is equally important is how we use gap analysis to inform the community,” Hirschhorn said.
“The real end game is a self-reinforcing trust, the trust the community and policy makers have in the tax administration.
“Tax is important to society and trust in the tax system is important to society.”
What is the tax gap?
The tax gap is an estimate of the difference between the amount of tax the ATO collects and what it believed it would have collected if every taxpayer was fully compliant with tax law.
The latest tax gap estimates found that for 2019–20, the ATO received $446.4 billion, or 93 per cent, of the $479.8 billion it would collect if everyone was fully compliant with tax law.
*Eliza Bavin, Personal Finance Editor, is a senior journalist focusing on economics, personal finance and company news amongst other things.
This article first appeared at au.finance.yahoo.com
