The reasons behind increasing transparency of tax return

Addressed to: Grant O'Brien (Chief Executive Officer of Woolworths)
19/04/2015
Word count: 1379

Topic: Why does the Australian legislator require additional ATO disclosures beyond AASB
112?

Table of content
1. Executive summary
2. Introduction
3. Summaries of the contents of Paragraph 79, 80, 81(c), and 84-86 of
AASB 112

4. The shortage in Woolworths’ present financial report
4.1 Accrual basis V.S. Cash basis
4.2 Tax information not separately disclosed correspond to each jurisdiction 4.3 How the ATO amends the vulnerability of AASB 112
5. Recommendations to Woolworths refer Rio Tinto’s tax report
5.1 How to achieve an easier assessable tax report for the public
5.2 How Woolworths can obviate aggressive tax avoidance

6. References

1. Executive Summary
AASB 112 has been implemented to give guidance to companies about how to disclose related tax information, also providing surveillance to the phenomenon of tax evasion. In a vastly developing economy, various large and multinational companies have found ways of escaping by paying minimal taxes. For example, shifting revenue to a lower tax rate country or manipulating past tax losses avoids huge amounts of tax payment. The ATO published disclosure requirements in 2014 aiming to eliminate this phenomenon. The main discrepancy between financial statement and company’s income tax is tax under financial statements were calculated based on accrual basis whereas tax under income tax return is under cash basis.
Indicating that total income, taxable income and income tax payable must be disclosed to increase transparency of the annual report, helping users gain a better understanding of the company’s income tax profile and effectively prevent the aggressive tax avoidance (The conversation 2014).

2. Introduction
This report