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Large corporate groups’ net income tax gap trending downwards

Large corporate groups’ net income tax gap reducing

The reduction is coinciding with a range of legislative reforms and increased personnel, according to the ATO.

Geoffrey Yiu

Partner, Corporate Tax

KPMG Australia


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The Australian Taxation Office (ATO) has released an updated estimate of the large corporate groups’ income tax gap for each of the 2010–11 to 2016–17 financial years. The restated figures show a downward trend for the past four years indicating that a number of legislative changes are having an effect on reducing the incidence of diverging views of the law.

The income tax gap

According to the ATO, the large corporate groups’ income tax gap is the difference between the total amount of income tax collected from large corporate groups and the amount the ATO estimate they would have collected if every one of these taxpayers was fully compliant with the tax law.

The approximately 1,500 large corporate groups included in the data are those with gross income exceeding $250 million in a financial year.

The ATO puts the reason for the gap down to differences in interpretation in complex areas of the law such as:

  • transfer pricing
  • treatment of offshore income and the use of controlled foreign companies
    business restructures
  • debt-equity tax arbitrage

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