01 January 2018

High ASIC fees costing up to $8.3b a year in lost tax revenue: report

Media release excerpt

Australia has the most expensive corporate financial data in the world and this results in as much as $8 billion in lost tax revenue each year, corporate tax researchers estimate in the first report out of a new project focusing on tax transparency.

The report suggests that free public disclosure of corporate financial data might decrease aggressive tax avoidance and increase Australia’s revenue from corporate tax receipts by between $3.6 billion and $8.3 billion a year.

“Australia has the most expensive corporate data in the world. If we made it free, so journalists, researchers and the general public could subject corporations to real scrutiny, we’d see up to $8.3 billion returned to public funds,” GetUp Campaigns Director Django Merope-Synge said.

“Politicians from all sides should jump on this and commit to making ASIC data free. It’s a real no-brainer. What possible reason could there be for not doing so?  Making ASIC data free is a true win-win. We get more transparency and increased corporate tax receipts for our local schools and hospitals,” Mr Merope-Synge said.

Corporate financial data is lodged with the Australian Securities and Investments Commission (ASIC) but access fees for this data are the highest charged out of 10 countries covered by the study, the researchers found.

“Many countries, including New Zealand and the United Kingdom, make access to financial records free, or available for a nominal fee,” Mr Merope-Synge said. “But Australia has the most expensive corporate data – with the cost almost twice the OECD average. If we made it free, so journalists, researchers and the general public could subject corporations to real scrutiny, we could see up to $8.3 billion returned to public funds.”

The researchers also found that Australia had one of the highest “tax gaps” among the countries studied. The tax gap is the difference between the nominal corporate tax rate and the amount corporations actually pay.

Associate Professor Roman Lanis said the tax gap has been used in the past as a measure of tax avoidance – with the highest tax gaps having been linked to the highest levels of tax avoidance.

Associate Professor Lanis, Dr Brett Govendir and Research Fellow Ross McClure, of UTS Business School, will work on a pilot project funded by a grant from GetUp investigating tax topics such as avoidance mechanisms, the strengths and weaknesses of existing laws in Australia and internationally, the adequacy of Australia’s tax intake, the impact of tax avoidance, along with best-practice solutions to avoidance, evasion and fraud.

It was a study conducted by them, supported financially by a grant from GetUp, that preceded the Federal Government’s decision in 2016 to introduce the Diverted Profits Tax.

“The new project would continue to produce independent, academically rigorous research with the aim of informing government policy and best practice,” Associate Prof. Roman Lanis said.

The report recommends Australia:

  • abolishes (or reduce to a nominal amount) fees for access to financial statements (within a financial report document) entirely;
  • adopts a more rigorous reporting regime, in which even foreign multinationals report in a consistent and clear way using all Australian accounting standards;
  • ensures the largest corporations pay what they owe, regardless of what the corporate tax rate is.