Dicker Data is among the local technology companies that have moved to clarify their tax stance after the Australian Taxation Office (ATO) released its second tax transparency report, revealing that over a third of the biggest companies in Australia paid no tax in 2014-15.
The annual report, released on 9 December, showed that Dicker Data, Distribution Central, Ingram Micro, Hills, Citrix Systems, Emerson Network Power Australia, Fuji Xerox Asia Pacific, Hewlett Packard, IBM A/NZ, NEC Australia, Schneider Electric Holdings, Dimension Data, Capgemini Australia, and CSG, and others came to the end of FY2014-15 with no tax bill.
While part of the rationale behind the transparency report is to help crack down on large companies involved in aggressive tax minimisation practices, the ATO stressed that a zero or low tax rate did not equate to tax avoidance, and could simply indicate a loss-making period for a company.
This was the case for Dicker Data, which reported a loss during the period, thanks in part to its $65.5 million acquisition of Express Data, and the move to bring its financial year in line with the calendar year during the period, leaving the company to lodge a tax return for just six months of the year in question.
“This period included the closing of the Express Data balance sheet which consequently resulted in all of the Express Data provisions being released and timing differences were reversed, reducing taxable income and was in fact a tax loss,” the company told ARN in a statement.
“By the time we completed the integration of the two organisations, the overall Dicker Data Financial Year (Jan-Dec) yielded a profitable result, meaning we have paid the full 30 per cent company tax rate for our 2016 tax return (reporting on the Jan – Dec period)."
Dicker Data stressed that it did not pay tax in the 2014-15 period because of its reported tax loss for the period, but is now back to paying the full corporate tax rate.
Further, the company revealed that the amount of tax that it paid in the FY2016 period, from January to December, stands at $7,554,932. This is off total revenue of almost $1.1 billion for the year ending December 2015, and net profit before tax of $29.4 million.
TechnologyOne has also pitched in, saying that its effective tax rate would have been in line with Australia’s corporate tax rate of 30 per cent, had the government’s research and development tax offset not been applied to the company’s finances.
“Our reduced tax is simply the result of our extensive R&D program, which underpins our innovation [and] creativity programs, and is critical to our continuing long-term success,” TechnologyOne executive chairman, Adrian Di Marco, said in a statement to shareholders.
“We are doing exactly what the Federal Government wants Australian companies to do. We are being innovative, creative, undertaking R&D, and claiming a legitimate R&D tax credit that we are entitled to claim.
“It is disappointing to see what the ATO has done, as it is both confusing and misleading,” he said.