Paying a fair share of tax is important
By Tony Pearson, Chief Economist and Executive Director – Industry Policy, Australian Bankers' Association
11 August, 2016: In the public discussion about the tax paid by companies it is often overlooked that banks in Australia make a big contribution to government revenue. The Australian banking industry pays the most income tax of any industry and the four biggest banks are among the biggest individual payers of tax.
In 2015 banks paid:
- Over $14 billion to governments.
- $12 billion to the Federal Government in corporate income tax.
- $1 billion in GST.
- More than $300 million in income tax on life insurance assets and about $100 million in fringe benefits tax.
- $1 billion to state and local governments in payroll tax, land tax and council rates, and other taxes.
The rate of tax paid by banks in Australia is high compared to many banks overseas. The corporate tax rate in Australia is a relatively high 30 per cent. Over the past 10 years there have been substantial reductions in the corporate tax rate for similar developed countries, but the corporate tax rate for Australia has not changed. In the UK the corporate tax rate is currently 20 per cent; in Singapore it is 17 per cent; in Canada, 26.5 per cent.
Ongoing confidence in the tax system requires that everyone pays their fair share of tax. Australia’s banks are public companies and information on their financial performance, including the amount of tax paid, is regularly published and available for public scrutiny. In this light the banking industry fully supports government initiatives to increase transparency of the tax paid by companies and endorses the voluntary tax transparency code proposed by the Board of Taxation.
More information on tax paid by banks can be found in this report