Aged care companies should be held to a higher standard, senate committee finds

Aged care companies backed by taxpayers should be “held to a high standard of accountability”, a senate committee has found.

Aged care companies should be held to a higher level of accountability, a senate committee has found. Picture: Comstock

Aged care companies that receive almost three-quarters of their revenue from taxpayers should be “held to a high standard of transparency and accountability” with regard to their tax affairs and there is merit to concerns about avoidance, a senate committee has found.

The Labor-dominated Senate economics reference committee released its report into the tax practices of for-profit aged care providers today which finds “greater investigation of the tax and financial structures of aged care providers is warranted.”

This is despite much of the research relied upon in the committee, from the Tax Justice Network report commissioned by the Australian Nursing and Midwifery Federation, being flatly refuted by providers and industry experts. No direct findings of illegal behaviour or even excessive tax avoidance practices were found throughout the inquiry.

“The committee is concerned by the apparent difficulty in obtaining a complete picture of these practices by for-profit aged care providers,” the report says.

“The committee contends that — in an industry that is tasked with caring for those who are highly vulnerable, and indeed, is heavily reliant on government subsidies to do so — such limited visibility is unacceptable to the public.

“Further, the committee notes evidence from the ATO that it has some concerns over the financing arrangements used by certain entities in the aged care industry, particularly the conditions of their related party financing arrangements.”

Coalition senators wrote a dissenting report, saying the inquiry was “highly irresponsible” because it was “conducted with a predetermined conclusion front of mind, but not the evidence to support that conclusion.”

“Coalition Senators are at pains to highlight that, despite receiving 32 public submissions and holding almost two full days of public hearings, this inquiry has made no substantive findings of systemic tax avoidance in this sector whatsoever,” Senator Jane Hume wrote.

“This inquiry was a waste of time and public money.”

Senator Hume accused the TJN report of being “intentionally misleading” because it found aged care companies paid company tax at a headline rate of more than 29 per cent, higher than the average corporate tax rate of 17 per cent paid in Australia.

Nevertheless, the report recommends current voluntary tax transparency code in Australia be made mandatory and improve accounting standards.