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
|1||Platinum Asset Management Limited||1,364,016,852||1,062,773,087||77.91%||318,708,086||29.99%||23.37%|
|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%|
|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%|
|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%|
|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%|
|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.
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
|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%|
|9||Woolworths Group Limited||198,758,324,942||10,016,800,314||5.04%||2,828,125,022||28.23%|
|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%|
|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.
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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