On Thursday (10 May 2018) the Senate referred for inquiry by the Senate Standing Committees on Economics (the Committee), the matter of "Financial and tax practices of for-profit aged care providers". The Committee is due to report back to the Senate by 14 August 2018. The inquiry arises from recent reports that have raised concerns about how aged care companies are dealing with their tax liabilities and in particular how they are dealing with the large amounts of taxpayer funds that go into their industry.
The Committee has been tasked by the Senate to look into the financial and tax practices of for-profit aged care providers, with particular reference to:
(a) the use of any tax avoidance or aggressive tax minimisation strategies;
(b) the associated impacts on the quality of service delivery, the sustainability of the sector, or value for money for government;
(c) the adequacy of accountability and probity mechanisms for the expenditure of taxpayer money;
(d) whether current practices meet public expectations; and
(e) any other related matters
Some of the key reasons leading to the Senate inquiry are expressed in a report by the Tax Justice Network (TJN), called "Tax Avoidance by For-Profit Aged Care Companies: Profit Shifting on Public Funds". The report was commissioned by the Australian Nursing & Midwifery Federation.
The report has found that the six largest aged care providers in Australia received more than $2.17 billion in government subsidies in the 2017 financial year making up 72 percent of their total revenue which was over $3 billion and in the period 2016 - 2018 these companies also reported profits of $210 million.
The Report also found that:
Of current attempts by government to reform this area of taxation the report says:
The report points to the difficulties in getting ". . . a detailed and complete picture of the full extent to which these heavily subsidised aged care companies are avoiding paying as much tax as they should, . . ." The report claims Australian law is ". . . not currently strong enough to ensure that their financial records and accounting practices are publicly available and fully transparent".
The report recommends that any company receiving Commonwealth funds over $10 million in any year must file complete audited annual financial statements with Australian Securities and Investments Commission (ASIC) in full compliance with all Australian Accounting Standards and not be eligible for "Reduced Disclosure Requirements".
Further, the report recommends that:
It will be interesting to see the report of the Committee when it is tabled in the Senate and exactly what legislation follows from its findings.
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.
FREE legislation news, delivered weekly.
Sign up now.#WeLoveLegislation Tweets
NEW information resources - great for training.