Tax-washing or decision-useful information: Australian voluntary tax disclosures

In 2016, the Voluntary Tax Transparency Code (TTC) was introduced to provide stakeholders (shareholders, analysts, social justice groups, the media, and politicians) with greater transparency by the corporate sector and to enhance the community’s understanding of the corporate sector’s compliance with Australia’s tax laws. These standards are applied to businesses with turnovers of $100 million, with greater detail required for large organisations with $500 million plus turnover per year. The TTC has drawn some researcher interest and has been the subject of an ATO review (Brown, 2020; McCredie, Sadiq, & Krever, 2021). However, little is known about the quality of TTC disclosures; some commentators have referred to the TTC documents as “akin to advertising or public relations materials rather than transparent disclosures of tax policies” (McCredie, Sadiq, & Krever, 2021, p. 594). Consequently, we aim to investigate the question: Do Australian TTC corporate disclosures present decision-useful information to intended stakeholders? Aligned with this question is an exploration of existing disclosures being similar to low-quality greenwashing sustainability reports, which pave the way for tax-washing (Martínez-Ferrero, Suárez-Fernández, & García-Sánchez, 2019).