Frank Lowy's Westfield shopping centre empire pays less than a third of the corporate tax rate, a report has found, sparking calls for an inquiry into the tax contribution of Australia's biggest companies.
An analysis of Westfield's financial results over nearly a decade by a university academic found the taxman has forgone as much as $2.6 billion from Westfield if the 30 per cent company tax rate had been enforced.
The report by Roman Lanis, a senior lecturer in accounting and tax at the University of Technology, Sydney, found the combined arms of Westfield pay an ''effective corporate tax rate'' of just eight cents in the dollar - far below the official 30 per cent rate levied on business in Australia. On average, the top 200 sharemarket-listed companies in Australia pay 22 cents in the dollar.
The report does not allege Westfield has done anything illegal, and nor does Fairfax Media.
Westfield, which is due to face shareholders at its annual meeting on Thursday, said the motive of the report was to ''embarrass'' the company as it was funded by United Voice, the union representing cleaners at Westfield's 38 malls.
The union and the company are locked in a dispute over conditions for cleaners who are paid a basic $17.50 an hour.
''Far from being embarrassed, Westfield is proud of its record of tax compliance,'' Westfield spokesman Mark Ryan said.
Dr Lanis' report found that over nine years between 2005 and 2013, Westfield paid an average annual tax of just $140 million on pre-tax profits of $1.7 billion.
The Westfield Retail Trust, a listed offshoot valued at nearly $10 billion, paid an effective rate of zero, his report concluded.
''If [both arms of] Westfield had paid tax at the statutory rate of 30 per cent, it could generate additional annual tax revenues of $541 million,'' Dr Lanis found.
A report by the Uniting Church last year identified Westfield, along with the major banks, for use of tax havens and low-tax jurisdictions. Westfield's highly complex corporate structure includes more than 50 entities registered in tax havens such as Jersey, Luxembourg and Singapore.
The listed property sector, of which Westfield is by far the biggest player, is among the most ''aggressive'' in terms of tax minimisation, Dr Lanis said.
He said it would take public pressure to get the government to act on wider corporate tax avoidance despite commitments Prime Minister Tony Abbott who has vowed to use Australia's leadership of this year's G20 meeting to push for a co-ordinated international crackdown on tax avoidance by global corporations.
''The government said the pain would be shared but if you look at the budget there was very little pain aimed at the corporate sector,'' Dr Lanis said. ''Society has been hit hard by the budget. As a society we need to raise questions and force further investigation. Surely there is a way to make companies pay their fair share.''
Westfield declined to confirm its actual Australian tax contribution but said the report was ''flawed and so obviously written to grab cheap media attention'' by United Voice. ''The 'report' has been generated as part of a long-running industrial campaign to achieve over-award payments for cleaning staff in Australia,'' Mr Ryan said.
United Voice national secretary David O'Byrne said a ''major'' inquiry was needed into corporate tax, combining all political parties, corporate tax, academics and the community sector. He said of Westfield's tax arrangements: ''It's not illegal but it's immoral.
''When the government is launching this attack on ordinary Australians, it is important that they have done all the work that can be done on the revenue side. Joe Hockey said the age of entitlement is over - well, over for who?''
Mark Zirnsak of the Tax Justice Network Australia said it was hard to get to the bottom of corporate tax affairs but said a review of nine years' results by Dr Lanis was ''robust''. ''At the moment, tax law is very secretive,'' he said.
