Renegade Economists Show
Roman Lanis (Assoc Prof Accounting, UTS) discusses tax evasion strategies by oil companies undermining one of our ‘most efficient’ taxes.
… our report, commissioned by union United Voice suggests the Westfield Group effectively paid just 8% tax in the seven years to 2013, and its property arm, Westfield Retail Trust (WRT), no tax at all.
This is due to extensive use by the both the Westfield Group and Westfield Retail Trust of trust structures known as Real Estate Investment Trusts (REITs), which it has combined with stapled securities.
However, in preparing its financial report Chevron Australia applies the Reduced Disclosure Requirements (RDR) which is allowed under the Australian accounting standards.
The RDR allows large proprietary companies that do not have public accountability to voluntarily apply the disclosure requirements of just a few accounting standards. Applying the RDR relies on the idea that the only companies which have such accountability are those which issue publicly tradeable equity or debt securities.
The consequences of allowing large proprietary companies such as Chevron Australia (and almost every other subsidiary of a multinational operating in Australia) to use RDR are enormous in terms of transparency. The ATO, in the past, has indicated that it relies on the annual reports of companies for related party disclosures in identifying tax avoidance.
Non-disclosure of this information by large proprietary companies makes it difficult for the ATO and anyone else in Australia to identify tax avoidance.
My big report, the Total Resource Rents of Australia found:
Accounting practices turned the PRRT’s 40% into an effective 3.2% rate when comparing resource rent revenues to profits for the two Australian companies ($174m/$5.5bn).
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