Private prison provider doesn't pay a cent in tax

A US multinational is paid tens of millions of dollars each year to operate prisons around Australia, but hasn't paid any tax in the last six years.

US multinational GEO Group has contracts worth $3.8 billion to run prisons around Australia but hasn’t paid any income tax in the country in the last six years.

According to the Australian Taxation Office’s corporate tax transparency report, released this week, GEO Group had a total income of $455 million in 2020-21, but no taxable income and paid no tax in that financial year.

The company hasn’t paid any tax in Australia since 2015-16, according to ATO reports.

GEO runs three prisons in Australia. The NSW government has handed it a near-$750 million contract to operate the Junee prison, while the Victorian government has contracts with it to run the Ravenhall prison for $2.5 billion until 2042 and for $593 million to run the Fulham prison from 1995 to 2035.

In 2021 alone, GEO was paid $54.5 million by the NSW government to run the Junee prison.

But the company, which is based in the US, paid no income tax in 2020-21.

Centre for International Corporate Tax Accountability and Research principal analyst Jason Ward said GEO had previously been structured as a real estate investment trust in the US and therefore not subject to US corporate income tax, but became a regular taxable corporation at the start of this year.

“Australia has one of the highest rates of private prisons in the world,” Ward says. “Leaving aside whether prisons should be privately operated or not, some of the multinational companies operating prisons in Australia appear to pay very little tax.”

“Whether private corporations should be contracted to run prisons is a separate issue, but corporations with a poor track record on tax and lacking in transparency should not be rewarded with government contracts. “

As the ATO states, there are “many genuine reasons why companies might pay no income tax”.

“We pay close attention to companies not paying tax,” ATO deputy commissioner Rebecca Saint said.

“We hold those companies that report continual year-on-year losses to an additional layer of scrutiny.

“While it’s true some large entities paid no income tax, we’re seeing through our justified trust program that there are high levels of compliance by these entities, and taking decisive action where there’s not.”

Australia’s other largest private prison operators also paid minimal taxes, despite boasting lucrative government contracts to run these facilities.

G4S, which runs the Mount Gambier Prison in South Australia and Port Phillip Prison in Victoria, recorded income of $282 million in the last financial year, but paid only $3.1 million in tax - just over 1 percent of its total income.

G4S runs the South Australian prison on a contract worth $124 million from 2017 to 2022, and the Port Phillip Prison on a contract running from 1996 to 2037, worth $1.8 billion.

G4S is owned by Allied Universal, the seventh largest private employer in the world which is 80 percent owned by a Canadian pension fund and private equity firm.

Serco, which operates the biggest prison in the country - Clarence Correctional Centre in New South Wales - and the Acacia prison in Western Australia, recorded a total income of $1.3 billion in 2020-21. Serco had a taxable income of $133 million, according to the ATO data, and paid $39.8 million in tax in the last financial year, or just over 3 percent of its total income.

In the previous financial year, Serco reported a slightly lower total income of $1.1 billion, but paid more tax, recording $86 million in payable tax, according to ATO data.

The corporate transparency report includes data on foreign companies with total income of more than $100 million, and Australia companies with annual turnover of more than $200 million.

The latest report found that just under a third of these companies paid no income tax at all.