The Senate has asked for an inquiry into allegations of tax avoidance among some of Australia’s largest for-profit aged care providers.

Last week, the Tax Justice Network released a report that claimed Australia’s six largest aged care providers are finding loopholes to minimise the amount of tax they pay.

The report claimed that the top six for-profit aged care providers received $2.17 billion in government subsidies but paid little, and in some cases no, tax.

The report, titled Tax Avoidance by For-Profit Aged Care companies: Profit Shifting on Public Funds, also alleged that some aged care providers have reduced the amounts they pay to employees and suppliers, despite receiving more money from the government and higher fees from residents.

On Thursday, the Senate referred the matter to an inquiry, which is due to report on 14 August. It will investigate the use of “tax avoidance or aggressive tax minimisation strategies” in the sector, and whether they have caused any impact on service delivery or “value for money for government”.

Lee Hill, Interim CEO of The Aged Care Guild, which represents eight of Australia’s largest for-profit aged care providers, said, “The Guild welcomes this opportunity for a public review of financial issues in aged care. We will make every effort to ensure that the Senate inquiry and through that process the Australian public is fully informed.

“This process is vital to the resolution of issues that we all face in meeting the growing aged care needs in our community,” he said.

The Australian Nursing and Midwifery Federation, which commissioned the Tax Justice Network report, also welcomed news of the inquiry.

The ANMF’s Acting Federal Secretary, Annie Butler, said, “There are no rules to ensure the $2.17 billion in government subsidies given to these for-profit providers is spent directly on… care.”

Butler said the report revealed some for-profit providers “have the financial capacity to employ more nurses and carers but are placing their profits and shareholders before safe care for their residents.”

“Companies that receive millions of dollars via Australian Government subsidies should be required by law to meet higher standards of transparency in financial reporting,” she said.

“Proof of government funding being directly spent on the care of elderly residents needs to be mandated as a prerequisite to receiving a subsidy.”

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