Star Wars: The Force Awakens was released around the country today and so was a new report from the Australian Taxation Office (ATO). The “Tax Transparency Report” will provide information on certain corporate taxpayers with incomes exceeding $100 million including their:
Like the Star Wars prequels, some readers may find details confusing in relation to the variations between revenue and taxable income. This is because the report does not provide details of expenditure or any specifics around differences between the net income and the taxable income of the entity.
There are often legitimate differences between the net income reported in the financial accounts and the taxable income of a company. This is due to discrepancies in the Australian Accounting Standards and the Income Tax Assessment Acts. For example:
- Tax losses carried forward from prior years; and
- The difference in the rate of depreciation used for accounting purposes to the amount allowable as a deduction by the Commissioner of Taxation.
What we expect will arise from the release of this report, is media attention on entities that did not pay tax in a given year even though they reported large amounts of revenue without further thought to legitimate reasons as to why it occurred.
As the wise Yoda may say “Clear your mind must be, if you are to understand this report”.