Are SME’s paying more tax than big business?

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The Australian Tax Office has released its findings into tax payments of some of Australia’s largest organisations for the 2016-17 financial year, revealing a third paid little to no company tax.

Efforts to crack down on tax avoidance have been successful throughout 2016-17, decreasing the tax gap to around $1.8 billion while collecting a total of $45.7 billion from 2,100 large businesses.

One of the most important findings was that large companies paid either no tax or paid tax as little as $856, leaving some small business owners furious.

The ATO said in its report 722 large companies did not pay tax in 2016-17, either because they made a loss, utilised prior losses or due to tax offsets and reconciliation items.

When companies are a part of a broader corporate group are taken into account, 77 per cent paid tax.

Compared to small businesses, small businesses pay the majority of the
Australia’s $23.7 billion company tax bill by the end of 2018.

In comments obtained by Smart Company, Accountant Lisa Greig of Perigee Advisers says some of her SME clients are paying more company tax annually than many of the large companies on the ATO’s list.

“Bigger businesses have more access to funding that allows them to do more sophisticated structuring, which can give them some tax advantages.” 

Greig says the practice of using past losses to offset future tax bills and taking advantage of things like R&D incentives are common big-business tactics, which are often not well understood by small businesses.

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