Over 1,200 Major Companies Paid No Tax, ATO Data Shows – And It’s Cracking Down on Profit Shifting

 

Introduction

In a striking revelation, the Australian Taxation Office (ATO) has disclosed that over 1,200 large companies paid no corporate tax during the 2022–23 financial year. That’s nearly one in three firms included in its annual report. While this might raise eyebrows, the ATO says “legitimate reasons” like accounting losses, offsets, or carried-forward tax losses are often behind it – but it also wants to stamp out aggressive profit shifting strategies. Let’s unpack what this means for businesses and why transparency matters.

📊 A Closer Look at the Numbers

Category	Figures (2022–23)
Total entities reporting	3,985
Paid no income tax	1,253 (31%)
Total taxable income	A$381 billion (↑11.3%)
Tax collected	A$97.9 billion (↑16.7%)
Assessments issued	124 companies, worth A$2.76 billion
Under dispute	A$2.22 billion among 14 companies

Why Are So Many Firms Paying No Tax?

The ATO outlines several legitimate pathways to zero tax liabilities:

1. Accounting losses – Firms reporting operating losses don’t owe tax.

2. Tax losses carried forward – Profits offset by previous losses.

3. Tax offsets & credits – For example, R&D claims.

4. Capital investments – Large investments generate deductions.

As Deputy Commissioner Rebecca Saint notes, while genuine cases are permitted, the ATO actively ensures companies aren’t “gaming the system” 

The Profit Shifting Problem

🌍 What is Profit Shifting?

Commonly referred to as Base Erosion and Profit Shifting (BEPS), this includes tactics like:

• Manipulated transfer pricing

• Over-invoicing through intercompany debt arrangements

• Offshoring intellectual property to avoid Australian tax 

ATO's Response

• Has reliability on global minimum tax agreements (e.g., OECD’s 15% rule), but Sydney’s 30% rate still leaves room for profit shifting

• Actively auditing and litigating aggressive profit-shifting cases, with “litigate to test legal principles” as a core strategy

• Collected A$2 billion+ extra through the Tax Avoidance Taskforce actions theaustralian.com.au.

Big Names Under the Lens

Several recognizable firms featured in the zero-tax list, notably in the tech sector:

• TPG Telecom – Income ~A$5.9 billion

• Sony Australia – Income ~A$1.5 billion

• Netflix Australia, Canva, CyberCX, Trend Micro, Huawei, Zip Co – all reported no tax 

Example:

• Microsoft had A$1.1 billion income in its data centre arm with zero tax due to deductions.

• Apple, Google, Facebook, and Samsung paid relatively low effective tax, much less than their total revenues .

Global Agreements: Are They Enough?

• OECD's 15% global minimum tax: Australia is a signatory, but that fixes only a floor – not the 30% national standard ft.com.

• New multinational disclosure laws now require firms with revenue over A$1 billion to open up on tax in low‑tax jurisdictions like Hong Kong or Singapore ft.com.

ATO Enforcement: Walk the Talk

• 124 companies faced assessments totaling A$2.76 billion; 14 are under active dispute 

• ATO won significant court cases, including vs Chevron (adjusting A$45 billion of interest expenses) and settlements with Rio Tinto (A$1 billion) & BHP 

• Introduction of strict laws like the Diverted Profits Tax and Multinational Anti‑Avoidance Law – violators may face penalty up to 100% tax owed .

Practical Tips for Businesses

1. Ensure genuine loss accounting – Document and justify every carried-forward loss.

2. Use R&D and other valid incentives – But claim supported by evidence.

3. Avoid risk with cross-border pricing – Keep thorough transfer-pricing documentation.

4. Appraise substance over form – ATO is less interested in tax labels, more in real-world substance.

5. Stay updated with global tax laws – Including OECD rules and anti‑avoidance measures.

6. Prepare for audits – Especially if operating across jurisdictions or in tech/R&D sectors.

Why This Matters for You

• Reputation risk – Zero-tax headlines can damage brand image.

• Access to incentives – Firms demonstrating compliance get broader trust when applying for grants/tenders.

• Future audits – ATO’s hardened stance means higher audit probability and stronger penalties.

• Investor confidence – Transparent tax reports can reassure stakeholders.

Conclusion

The stark figures from the ATO’s 2022–23 report show both legitimate zero-tax outcomes and warning signals of aggressive profit shifting. While accounting losses, offsets, and carried tax losses justify many cases, large tech and multinational companies are under close scrutiny. Australia’s global tax agreements and new transparency laws are steps forward. Still, for companies, sound documentation and honest corporate substance are the best shields against hefty audits, penalties, and reputational harm.

FAQs

Q: Does paying no tax mean a company is dodging taxes?
A: Not always. Many companies claim valid deductions—like losses, R&D credits, or carry-forwards—that legally reduce taxable income to zero.

Q: What is profit shifting (BEPS)?
A: It’s when multinationals shift profits from high-tax countries (like Australia) to low/no‑tax jurisdictions through strategies like transfer pricing or debt structures.

Q: How is the ATO responding?
A: Through audits, litigation, new tax laws, a tax avoidance taskforce, and international tax accords. They’ve recovered billions from assessments and have more enforcement planks underway.

Q: Will the OECD Global Minimum Tax fix everything?
A: It helps set a floor, but since Australia’s corporate rate is higher (30%), profit-shifting tactics still require vigilant oversight.

Q: What steps can SMEs take?
A: Maintain clear records, use legitimate tax incentives, comply with transfer-pricing rules, and get professional guidance for cross-border dealings.

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Keywords: ATO tax transparency, profit shifting, BEPS, large companies no tax Australia, multinational tax avoidance, corporate tax compliance, global minimum tax, transfer pricing.