Reduction of ‘private companies’ total income threshold, for public reporting of high level tax data – Private Senator’s Bill passes Senate and moves to Lower House

The Private Senator’s Taxation Administration Amendment (Corporate Tax Entity Information) Bill 2017, which was introduced in the Senate on 14 August 2017 by the former ALP Senator Katy Gallagher, was passed on Monday 25.6.2018, by the Senate with amendments from the Greens.

This Bill would amend law, that requires the Commissioner to publicly disclose certain high level tax information, for companies whose gross income level exceeds certain thresholds. A $100m threshold was set for Australian public and foreign owned corporate tax entities and a higher $200m threshold was set for Australian-owned resident private companies. The thrust of this Bill is to align those two thresholds at $100m for both. As the EM notes:

• Private companies were originally included in the public disclosure, at the same $100m total income threshold in the Tax Laws Amendment (2013 Measures No. 2) Bill 2013.
• In October 2015, private companies were removed from public disclosure, altogether – in Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Bill 2015.
• Then, in December 2015, private companies were again subject to the public disclosure regime, albeit it at the higher $200m total income threshold. This was under the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015.
• The EM says: “No genuine policy rationale was given for either the removal of the public reporting requirement for [private] companies, nor the restoration of the requirement with a significantly higher threshold. The $200 million threshold results in approximately 600 large private companies (about two-thirds of those affected by the original measure) not having high-level tax information scrutinised, unlike comparably sized public companies.”

The amendment would be to s3C(1) of the TAA and would take effect in relation to the 2017/18 year.

The Green’s amendment (which was passed) was to lower the private companies income threshold to $50m, so that the two thresholds no longer align (again, it seems, without rationale).

The Bill will still have to be passed in the Lower House, where the Government has the numbers to defeat the Bill, if it wishes. Time will tell, whether it will reject the Bill. I note, however, it was the same Government (albeit in a different Parliament) who initially proposed public disclosure for private companies (with a matching $100m total income threshold), then boughed to private company interests, to remove them from the public disclosure, only to do the deal with the Senate to re-include private companies, albeit with an income threshold twice as much as for public companies. The Government controlled Lower House might not be happy to have its original deal disturbed.

FJM 27.6.18

[APH website: Bills Tracker, Bill, EM; LTN 119, 25/6/18; Tax Month – June 2018]

Study questions (answers available)

1. Does this Bill relate to the Commissioner’s obligation to publish certain high level tax data (which he would otherwise have to keep secret)?
2. Are both public and private companies subject to this compulsory public disclosure (‘transparency’) regime?
3. Was the income threshold (for public disclosure) originally the same for both public and private companies?
4. Are the income thresholds, still the same?
5. If passed, would this bill lower the $200m income threshold, for private companies, down to $50m?
6. Would this, now align the two income thresholds?
7. Is this Senate Bill, a private member’s Bill?