Customer owned banking sector a top 50 taxpayer


 New data shows the customer owned banking sector’s consistently strong financial performance ranks the sector comfortably in the top 50 corporate taxpayers.

Latest figures released by APRA show the sector’s profit before tax in the year ending September 2019 was $670 million. The sector’s income tax for the year was $195 million.

This amount would rank the sector at number 41 on the latest table of corporate taxpayers released by the ATO under the Corporate Tax Transparency Report.

“Customer owned banking institutions are good corporate citizens and meet their obligation to pay company tax on their profits,” said COBA CEO Mike Lawrence.

“Our sector’s after-tax profit goes back into our businesses to support growth and investment.

“It is important that customer owned banking institutions are profitable to ensure they are strong and sustainable but making a profit is not the reason why we exist.

“Customer owned banking institutions exist to serve their customers. They are focused on providing excellent products, competitive pricing and unmatched service to their customer owners and are not obliged to pay dividends to a separate group of shareholders.

“This feature of our model means that company tax paid by our sector is more likely than company tax paid by listed banks to be retained as government revenue.

“Under the dividend imputation regime, company tax is essentially a withholding tax with the final tax due on a company’s distributed profits being determined by the marginal tax rate of the shareholders.

“The total tax paid on company earnings is lower than the company tax rate if the average marginal tax rate of a company’s shareholders is below the company tax rate.

“For shareholders whose marginal tax rate is zero, company tax paid is refunded.”