Money Minute – December 8 2017 The Next Tax Crackdown

The Next Tax Crackdown

Big companies do not pay tax – sure scoop! That’s a pretty obvious thing to say. Well – not so.

The Tax Office has disclosed tax paid by the biggest 200 or so Aussie companies, public and private.

These numbers are just out and show a third of this group do not pay tax in the 2015-16 financial year. The total tax paid by these compares, according to reports, $38.2 billion. Around $3.6 billion less than the previous year.

Ah! They are cheating  – that’s the easy thing to say. For some, its unfair though.

Some, and I stress some, have legitimate for paying no company tax. Most obvious one, they didn’t make any money. Now, imagine you set up a company today with all the upfront costs it would take 1 to 2 years , maybe longer, to make a profit.

Then the years you lose money, you build up tax losses that will reduce your taxes, for when you do make a profit.

Now, even the tax office says 20 – 30 percent of companies don’t pay tax in any given year. But, more than make a profit and pay the tax, the better, obviously, off we all are.

Then there are those who deliberately dodge tax. And this is where we have to have faith in the tax office and its vigilance in chasing the cheats. In 2014-15 tax year, the tax office said the tax gap between what companies should’ve paid, and what they did pay, was around $2.5 billion.

They said it reflected differences in interpreting the law.  Now the good news is that is reducing.

Big corporates will pay more. That’s because of things such as the new so-called Google Tax which could be up to $2 million a year.

Well – before you think big companies cheat, there is another story today from the tax office and that is you…paying tradies, or your cleaners say, with cash.

The Tax Commissioner wants you to stop. The Black Economy could be worth $25 billion a year – 10 times more than that corporate tax gap.

Markets

Overnight, the Dow Jones up by 77 points. The Dollar 75.1 US cents

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