Organisations named in the recent report on the tax practices of for-profit aged care providers say it contains misleading statements and inaccurate comparisons, submissions to a Senate inquiry show.
The Senate Economics Reference Committee began an inquiry into the financial and tax practices of for-profit aged care providers in May.
The inquiry was proposed by Australian Labor Party Senator Jenny McAllister in response to the report on for-profit aged care providers by The Tax Justice Network – Australia that “suggests very complex arrangements are being used to hide profits and minimise tax.”
The inquiry is also addressing the impacts financial practices have on service quality, the accountability of tax payer money and whether the current practices met public expectations (read more here).
Opal Aged Care and Bupa Aged Care are among providers highlighted in the report Tax Avoidance by For-Profit Aged Care Companies: Profit Shifting on Public Funds, which was commissioned by the Australian Nurses and Midwifery Federation.
Opal addressed claims made by the TJN that it had not paid any tax in 2014-2014 in its submission to the inquiry. Opal said it paid more than $100 million in taxes between 2014 and 2017, $40 million of which related to the 2014-2015 financial year.
The TJN report fails to recognise Opal’s corporate income tax paid was “reduced due to its lawful utilisation of carry forward tax losses in determining the taxable income for its tax paying entities,” Opal’s inquiry submission states.
Bupa said in its submission said that the TJN report inaccurately stated its overall income, using Bupa Australia’s income ($7.5 billion) rather than Bupa Aged Care’s income ($573 million) for the year ending 31 December 2015.
Bupa Aged Care represents less than 10 per cent of Bupa Australia’s revenue and profit, Bupa Aged Care managing director Jan Adams told Australian Ageing Agenda.
She said the TJN report “focused on revenue rather than profit, when most revenue is used to cover the costs of care delivery and services, including wages.”
She said the report also made false assumptions about Bupa Australia’s corporate structures and suggested it was shifting profits to avoid paying tax.
“Bupa Australia does not use any tax avoidance or aggressive tax minimisation strategies and has an effective income tax rate of over 28 per cent,” Ms Adams said.
The TJN report reinforced the misconception that Australian residential aged care providers were highly profitable, she said.
“Current profitability in the Australian aged care sector is moving below the cost of capital,” Ms Adams said. “The sector is facing significant challenges, including increasing costs of delivering aged care services and an ageing population.”
In its submission, the Australian Taxation Office said “nothing in our engagement with entities in the for-profit aged care services industry suggests their tax risk appetite is different from other sectors of the economy. The overwhelming majority want to comply and our engagements with them are aimed at making compliance as easy as possible.”
It said there were two programs in place for public groups and multinational businesses – the Top 100 and Top 1,000 programs – to help maintain community confidence that organisations were paying the correct amount of tax.
Regis Healthcare, Japara Healthcare and Allity Aged Care are among other providers mentioned in the TJN report that have made submissions to the inquiry.
In its submissions, Regis, Japara and Allity said they do not use corporate structures to shift profits into other entities to allow for a reduction in tax payments.
These providers also said they were fully compliant with all tax laws and have not implemented any tax avoidance or aggressive tax minimisation strategies.
Opal, Bupa, Regis, Japara and Allity are among eight members of the Aged Care Guild, the peak body for the largest for-profit residential aged care providers in Australia.
There are concerns the TJN report will distract the country from discussing the critical topics including how to sustainably fund the Australian aged care system, the Aged Care Guild said in its submission.
The Tax Justice Network did not contact any of the five Guild members mentioned in the report [prior to its publication] to verify the assertions or seek a response, it said.
The Senate Economics Reference Committee has published 29 submissions to date. The Senate is required to report by 14 August 2018.
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