PwC chief executive Luke Sayers has revealed that profits relating to partners are distributed in three ways: directly to partners which are taxed as personal income at the partner’s marginal income tax rate; through an Everett assignment; and via the firm’s services trust which may be distributed to a range of beneficiaries and taxed at their relevant tax rates.
As a result, the firm’s partners — now numbering around 700 — pay an average tax rate of 37 per cent, in line with the marginal tax rate for taxpayers earning up to $180,000 a year.
“Our firm turns over in excess of $2 billion in revenue annually and employs more than 8,000 people, making us a significant contributor to Australia’s economy and tax system,” Mr Sayers said.
“Over the last three years, PwC, its partners and its employees have contributed more than $1.7 billion in total taxes.
“In the 2018 financial year alone, we contributed more than $620 million in taxes. This total tax contribution includes taxes paid on partner income, fringe benefits tax, payroll tax, stamp duty as well as taxes collected on behalf of the government such as GST and staff PAYG.”
PwC’s revelation comes after Greens senator Peter Whish-Wilson had asked the ATO to reveal the aggregated income of the big four firms, with the Tax Office revealing that big four partners earned a collective $7.6 billion in 2017, alongside $2 billion in taxable income.
“We regularly engage with the ATO on our tax affairs to ensure we are in compliance with the ATO’s principles and guidance regarding the taxation of partnerships,” Mr Sayers said.
“We take our tax affairs extremely seriously, and we have robust tax compliance policies and procedures in place governing the tax affairs of our partners.”
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.