Australia's biggest companies save $25 billion with tax deductions

Australia’s largest 900 companies secured $25 billion worth of tax deductions and exemptions in 2013-2014, Fairfax Media reports.

The Australian Tax Office (ATO) data shows that these 900 companies paid a tax rate of just 19.3 per cent, far below the official corporate tax rate of 30 per cent.

The ATO figures, obtained under the Freedom of Information Act, show that after omitting loss-making companies from the calculations, the average tax rate is around 21 per cent.

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According to the document, the top 900 companies paid $44.7 billion in 2013-14, but they would have contributed an extra 24.8 billion had they paid at the official tax rate.

The average Australian pays more tax on their income than these companies.

Australians are currently taxed on average 22.7 per cent of their income according to Treasury’s tax discussion paper.

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The document posits that without significant reform, the average Australian will end up paying 27.4 per cent of their income by 2023.

The ATO reportedly argued that the figures drawn from the document were taken out of context because the list of the 900 companies included the likes of super funds, which pay 15 per cent tax on profits and stapled securities, which don’t pay company tax, were included.

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A spokesperson for Treasurer Joe Hockey told Fairfax Media, that the figures in isolation were misleading.

"The document you refer to was created for internal ATO use and looks at the notion of 'effective tax rate' as a proportion of tax paid to accounting profit,” he said.

“This is simply a benchmark – tax is not applied on accounting profit and taxable income is a very different concept.”