Top 40 Tax Heroes: who pays the most tax in Australia?

Which corporations make the best contribution to Australia’s tax base, per dollar earned? Who tips in most for our defence and health, our roads and bridges? Michael West reports on the biggest taxpayers, and the best, the Top 40 Tax Heroes.

Deservedly, Australia’s most egregious corporate tax avoiders have taken a good hammering again this year, thanks to the Top 40 Tax Dodgers countdown.

If the likes of Exxon and EnergyAustralia, with their tax havens and massive related party loans from offshore, are the heaviest “leaners”, then who are the heavy lifters? It is fitting to recognise those companies who contribute most to the society in which they operate.

We are publishing two lists here, two top forties: the Tax Heroes and the Biggest Taxpayers. Heading up the Biggest Taxpayers list are the big four banks, the supermarket duo Woolworths and Wesfarmers, BHP, Telstra and Rio Tinto.

These are the biggest taxpayers by virtue of their sheer size but they are not necessarily the best. We have done some calculations around the 2,000 biggest companies in Australia to work out which ones did the least to minimise their taxable income and did the most to contribute to the this country’s tax base.

Topping the list of Tax Heroes again this year is Kerr Neilson’s Platinum Asset Management. Rising to second place we have ASX and then Magellan Financial Services in third. There are some interesting things to consider.

The Top 40 Tax Heroes 2019

Rank	Company	4 Years Total Income	4 Years Taxable Income	4 Years Margin	4 Years Tax Payable	4 Years Tax Rate	4 Years Leakage
1	Platinum Asset Management Limited	1,364,016,852	1,062,773,087	77.91%	318,708,086	29.99%	23.37%
2	ASX Limited	3,515,032,983	2,343,662,822	66.68%	685,421,348	29.25%	19.50%
3	Magellan Financial Group Limited	1,105,930,713	690,719,131	62.46%	205,418,832	29.74%	18.57%
4	Robe River Mining Co Pty Limited	8,155,347,470	4,457,217,964	54.65%	1,336,057,694	29.98%	16.38%
5	Japan Australia LNG (Mimi) Pty Ltd	8,022,714,209	4,380,740,425	54.60%	1,292,112,746	29.50%	16.11%
6	Interlink Roads Pty Limited	1,002,363,503	519,308,980	51.81%	155,792,693	30.00%	15.54%
7	Nippon Steel & Sumitomo Metal Australia Pty Limited	3,775,678,893	1,920,154,472	50.86%	570,851,000	29.73%	15.12%
8	carsales.com Limited	1,045,291,857	575,245,718	55.03%	155,228,944	26.98%	14.85%
9	Future Fund Investment Company No. 2 Pty Ltd	7,683,730,201	3,890,999,236	50.64%	1,138,750,054	29.27%	14.82%
10	Rea Group Limited	2,275,342,272	1,281,239,933	56.31%	336,175,291	26.24%	14.77%
11	Schroder Australia Holdings Pty Limited	644,519,498	314,688,243	48.83%	94,244,071	29.95%	14.62%
12	Hancock Prospecting Pty Ltd	9,435,285,410	4,605,349,496	48.81%	1,372,543,615	29.80%	14.55%
13	Burrup Facilities Company Pty Ltd	5,312,433,111	2,534,974,516	47.72%	759,793,592	29.97%	14.30%
14	Credit Agricole Cib Australia Limited	644,546,384	279,751,043	43.40%	83,925,313	30.00%	13.02%
15	Citibank NA	2,630,578,828	1,133,850,967	43.10%	340,155,289	30.00%	12.93%
16	Caterpillar Financial Australia Limited	750,755,407	317,331,578	42.27%	95,199,473	30.00%	12.68%
17	Mitsui-Itochu Iron Pty Ltd	4,159,326,005	1,684,244,370	40.49%	501,545,215	29.78%	12.06%
18	Credit Corp Group Limited	824,506,964	289,106,831	35.06%	86,591,201	29.95%	10.50%
19	Perron Investments Pty Ltd	2,452,146,511	864,422,867	35.25%	242,007,610	28.00%	9.87%
20	Perpetual Limited	1,985,627,997	665,534,156	33.52%	190,388,276	28.61%	9.59%
21	Future Fund Investment Company No.4 Pty Ltd	8,073,913,508	2,559,052,174	31.70%	767,294,506	29.98%	9.50%
22	Susquehanna Pacific Pty Ltd	1,074,082,964	350,600,594	32.64%	101,114,329	28.84%	9.41%
23	Oversea-Chinese Banking Corporation Limited	1,160,297,479	360,093,321	31.03%	108,027,997	30.00%	9.31%
24	Nutricia Australia Pty Ltd	1,399,783,281	429,318,928	30.67%	128,795,679	30.00%	9.20%
25	Groote Eylandt Mining Company Pty Ltd	4,972,150,412	1,510,704,149	30.38%	445,707,899	29.50%	8.96%
26	Cabcharge Australia Limited	774,024,675	235,300,974	30.40%	69,254,024	29.43%	8.95%
27	Baosteel Australia Mining Company Pty Ltd	691,171,296	198,975,006	28.79%	59,692,502	30.00%	8.64%
28	Australia Pacific Airports Corporation Limited	3,536,590,027	1,013,702,223	28.66%	304,110,666	30.00%	8.60%
29	Flinders Port Holdings Pty Ltd	852,198,188	242,131,082	28.41%	72,639,325	30.00%	8.52%
30	Federal Express (Australia) Pty Ltd	847,188,232	237,385,029	28.02%	71,215,508	30.00%	8.41%
31	Argo Investments Limited	1,000,400,637	1,255,707,779	125.52%	84,007,379	6.69%	8.40%
32	Bank Of China Limited Sydney Branch	3,603,654,156	1,021,085,271	28.33%	295,505,916	28.94%	8.20%
33	Ainsworth Game Technology Ltd	663,482,979	304,378,582	45.88%	53,476,998	17.57%	8.06%
34	Amplifon Australia Holding Pty Ltd	600,985,425	157,733,250	26.25%	47,319,975	30.00%	7.87%
35	Ioof Holdings Ltd	3,356,793,154	1,110,733,800	33.09%	262,832,631	23.66%	7.83%
36	Cedar Woods Properties Limited	811,658,033	227,360,907	28.01%	63,547,426	27.95%	7.83%
37	Ubs Holdings Pty Ltd	2,414,535,003	672,883,023	27.87%	188,972,089	28.08%	7.83%
38	Seek Limited	2,344,788,482	878,679,596	37.47%	183,350,874	20.87%	7.82%
39	British American Tobacco (Australasia Holdings) Pty Limited	12,374,692,716	3,241,089,606	26.19%	967,159,163	29.84%	7.82%
40	East Yarra Friendly Society Pty Ltd	1,311,514,871	340,337,831	25.95%	102,101,349	30.00%	7.78%

There is an element of good fortune, not just good nature, in these rankings. Being a good taxpayer is about being in the right sector at the right time in history. There are no low-margin businesses in the table above; mostly well run financial services businesses and miners whose assets are in a mature stage spitting out plenty of cash.

As Kerr Neilson said when we interviewed him for this story last year, as an investment company, Platinum was essentially some staff, some desks and some computers.

Kerr Neilson: the case for corporate tax cuts is weak

This is a super-high margin business, in part because of what it does, that is, invests other people’s money; but it also comes down to Platinum’s investment performance and reputation over the years.

There are very few businesses which can produce a profit of $1 billion on $1.36 billion of revenue. That’s a margin of 78 per cent. If you look at the table below of the top taxpayers, the big banks’ margins are still nice and chunky at between 25 and 30 per cent but Woolworths and Wesfarmers (which owns Coles) have margins of just over five per cent, meaning they soak up 95c of every dollar in costs to run the business.

These are huge volume businesses which only get to keep a fraction of the revenue they make.

Among key patterns in the data:

• As with the Top 40 Tax Dodgers, more than 95 per cent of these companies are audited by Big Four global accounting firms EY, PwC, KPMG and Deloitte.
• The Big Four themselves, despite their fabulous profitability appear on no list. They are housed in arcane partnership vehicles and don’t have to report their finances.
• There are not many foreign-controlled multinationals on the good tax lists, which is indicative of the general global trend for multinationals to be more aggressive in their tax practices away from home.
• The Heroes list is well represented in financial services thanks to high margins: see Platinum, Magellan, ASX, Perpetual, Argo, UBS, Credit Agricole, Credit Corp and Future Fund.
• Internet stocks domiciled in Australia, Carsales.com, Rea and Seek, make the Heroes list, which demonstrates some new economy stocks are making a contribution, but not foreign ones.
• In contrast, the Australian offshoots of global tech giants Apple, Google, Booking.com and Amazon appear on neither list despite the billions of dollars they make from their Australian operations.
• Most of the companies on these good taxpayer lists file General Purpose financial statements, rather than the inadequate Special Purpose accounts typical of the Top 40 Tax Dodgers.

The Top 40 Biggest Taxpayers 2019

	Company	4 Years Total Income	4 Years Taxable Income	4 Years Margin	4 Years Tax Payable	4 Years Tax Rate
1	Commonwealth Bank Of Australia	171,955,511,418	45,547,770,794	26.49%	13,208,315,044	29.00%
2	Westpac Banking Corporation	150,370,618,310	41,074,008,733	27.32%	11,491,100,773	27.98%
3	BHP Billiton Ltd	138,150,635,978	36,835,591,399	26.66%	10,266,847,670	27.87%
4	National Australia Bank Limited	182,163,251,940	42,796,358,724	23.49%	9,405,206,096	21.98%
5	Rio Tinto Ltd	122,758,576,258	32,082,460,478	26.13%	8,654,851,233	26.98%
6	Australia And New Zealand Banking Group Limited	117,693,647,669	35,134,353,955	29.85%	8,368,201,491	23.82%
7	Telstra Corporation Ltd	106,605,243,375	23,609,466,485	22.15%	6,836,994,896	28.96%
8	Wesfarmers Limited	263,378,801,121	14,465,972,028	5.49%	4,167,270,592	28.81%
9	Woolworths Group Limited	198,758,324,942	10,016,800,314	5.04%	2,828,125,022	28.23%
10	AMP Limited	115,430,427,876	24,628,215,383	21.34%	2,464,586,108	10.01%
11	Fortescue Metals Group Limited	40,254,378,978	7,889,207,337	19.60%	2,176,417,360	27.59%
12	Suncorp Group Limited	63,338,197,061	7,211,049,214	11.38%	1,891,178,452	26.23%
13	Hancock Prospecting Pty Ltd	9,435,285,410	4,605,349,496	48.81%	1,372,543,615	29.80%
14	Robe River Mining Co Pty Limited	8,155,347,470	4,457,217,964	54.65%	1,336,057,694	29.98%
15	Japan Australia Lng (Mimi) Pty Ltd	8,022,714,209	4,380,740,425	54.60%	1,292,112,746	29.50%
16	Mitsui & Co. (Australia) Ltd	22,964,778,351	6,707,902,212	29.21%	1,273,161,193	18.98%
17	Woodside Petroleum Ltd	28,436,248,791	7,293,287,656	25.65%	1,211,141,717	16.61%
18	BP Regional Australasia Holdings Pty Ltd	96,558,565,904	4,677,510,366	4.84%	1,192,601,976	25.50%
19	Future Fund Investment Company No. 2 Pty Ltd	7,683,730,201	3,890,999,236	50.64%	1,138,750,054	29.27%
20	Shell Energy Holdings Australia Limited	52,895,515,442	5,523,388,500	10.44%	1,116,515,536	20.21%
21	Bechtel Australia Pty Ltd	33,411,558,139	3,498,534,798	10.47%	1,049,560,439	30.00%
22	Singapore Telecom Australia Investments Pty Limited	35,331,207,171	3,673,543,098	10.40%	999,563,205	27.21%
23	British American Tobacco (Australasia Holdings) Pty Limited	12,374,692,716	3,241,089,606	26.19%	967,159,163	29.84%
24	Alcoa Of Australia Ltd	15,273,233,413	2,816,546,232	18.44%	825,791,750	29.32%
25	Future Fund Investment Company No.4 Pty Ltd	8,073,913,508	2,559,052,174	31.70%	767,294,506	29.98%
26	Burrup Facilities Company Pty Ltd	5,312,433,111	2,534,974,516	47.72%	759,793,592	29.97%
27	Macquarie Group Limited	36,441,453,642	3,698,531,942	10.15%	700,730,521	18.95%
28	Cimic Group Limited	46,711,347,657	2,703,777,687	5.79%	700,710,812	25.92%
29	ASX Limited	3,515,032,983	2,343,662,822	66.68%	685,421,348	29.25%
30	AGL Energy Limited	47,723,967,848	2,297,108,668	4.81%	682,978,682	29.73%
31	Qbe Insurance Group Limited	28,689,152,744	2,627,405,564	9.16%	676,025,292	25.73%
32	Insurance Australia Group Limited	57,144,432,755	3,626,145,969	6.35%	671,241,227	18.51%
33	Philip Morris (Australia) Limited	12,630,541,989	2,204,543,509	17.45%	661,363,052	30.00%
34	Bendigo And Adelaide Bank Limited	12,827,224,324	2,281,031,266	17.78%	652,738,088	28.62%
35	Ramsay Health Care Limited	16,885,988,340	2,096,029,587	12.41%	623,089,943	29.73%
36	Allianz Australia Limited	17,974,566,396	2,174,644,797	12.10%	600,598,845	27.62%
37	Nippon Steel & Sumitomo Metal Australia Pty Limited	3,775,678,893	1,920,154,472	50.86%	570,851,000	29.73%
38	Toyota Motor Corporation Australia Ltd	41,281,300,379	1,946,848,182	4.72%	551,240,353	28.31%
39	Mitsubishi Development Pty Ltd	22,163,069,605	1,955,596,533	8.82%	541,168,578	27.67%
40	TPG Telecom Limited	7,129,450,223	1,750,618,970	24.55%	519,410,115	29.67%

For all their sins – for all the rampant, systemic fraud exposed by the Banking Royal Commission – the banks are the biggest taxpayers in the country. Commonwealth Bank is Australia’s biggest. According to the four years of Tax Office transparency data, the CBA showed tax payable of $13.2 billion.

Interestingly, as close observers of the franking credits debate will have noticed, not all of this $13.2 billion goes to the Government to pay for defence, infrastructure, the public service and so forth.

The amount which goes to the national coffers excludes these franking credit payments which go to those who have reduced their taxable income. Billions of dollars therefore in tax payments do not end up in the tax base.

Franking Credits: why no government payment for bank interest?

To the sectors. Although there are some notorious dodgers in the resources sector such as the oil and gas majors and Glencore, some mining companies do make a large contribution. Gina Rinehart’s Hancock Prospecting comes in at #12 on the Heroes chart with $1.4 billion payable over four years and Rio’s partner Robe River, Nippon Steel and Baosteel also appear.

Lifters and Leaners within sectors

In health, Ramsey Healthcare turns up in the Biggest rankings while Healthscope appears on the Dodgers. Likewise Allianz and QBE the insurers on the Biggest while Swiss Re and Hannover life are on the Dodgers. Again, Toyota is on the biggest but a slew of other carmakers feature on the Dodgers.

Among the foreign banks, UBS, Citibank, OCB and Bank of China are on the Heroes chart while BNP Paribas and ING rank on the Dodgers.

Another feature of the contrasting lists is companies who require more a social licence to operate tend to pay more tax. Hence tobacco companies, British American Tobacco features on the Heroes and Phillip Morris on the Biggest list. The ASX, which is a virtual monopoly ranks #3 on the Heroes chart while the local banks, which enjoy taxpayer protection – a bail-out fund – rank highly on the Biggest table.

A word on methodology

The tables are calculated with the four years of available data from the Tax Office transparency disclosures, from 2012/13 to 2016/17. Therefore last year’s performance is not included. Where possible, we searched the most recent financial statements for the Top 40 Tax Dodgers list to bring it up to date.

We have adopted a unique metric in these rankings: “leakage”. Leakage is an ironic term used in tax circles which simply means tax, the amount of income, that is, which “leaks” to the Tax Office. Mathematically, we have calculated leakage as the margin (taxable income to total income) multiplied by the tax rate.

Most businesses are cyclical. They periodically fall into losses and therefore generate bona fide tax losses. They don’t have to pay tax if they don’t make profits as tax is payable on taxable income. With every year which passes, the rankings will provide an ever more accurate guide to who contributes fairly to this country and who doesn’t.

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