IBM A/NZ, ASG Group, Citrix Systems Asia Pacific, Canon, Schneider Electric and Atlassian Australia were among the top earning technology companies in Australia that paid zero tax while still reporting taxable income in the financial year ending 2016.
The figures come from the Australian Taxation Office’s (ATO) latest corporate tax transparency report for the 2015-16 financial year, released on 7 December, which includes tax information of more than 2,000 large companies operating in Australia.
The reports list public and foreign owned entities with total income of $100 million or more, as well as Australian-owned resident private entities with total income of $200 million or more, that reported tax returns for the 2015-16 income year.
Part of the rationale behind the move to make taxation records public is to help crack down on large companies involved in tax minimisation and avoidance practices, an ongoing focus for the Federal Government.
While the list highlights dozens of companies that paid no tax, and even more that paid well below the standard 30 per cent Australian corporate tax rate, the ATO stressed that a zero or low tax rate did not equate to tax avoidance.
“In reviewing the data released today, there may be a focus on the number of groups which paid either no tax or small amount of tax relative to gross income,” the ATO said in a statement.
“It is important to remember that corporate income tax is payable on profits, not gross income; in any given year, a significant percentage of even the largest companies make losses, not just for tax purposes, but also for accounting purposes; [and] it reflects the tax returns as lodged, and does not reflect subsequent ATO compliance activity."
According to the latest report, Toshiba (Australia) paid $177,847 in tax from $5.4 million in taxable income, off the back of $434 million in total income, putting it well under the standard 30 per cent Australian corporate tax rate.
Nokia Solutions and Networks Australia, meanwhile, paid $18,575 in tax from taxable income of $3.1 million and total income of $202.1 million, also less than the 30 per cent standard rate.
Datacom Australia Holdings reported taxable income of $11.4 million off the back of $432 million, and paid just over $2.4 million.
By comparison, ASG Group Limited reported a taxable income of $15.7 million off the back of $189 million in total income, yet claimed zero tax payable.
At the same time, Melbourne IT paid $434,705 in tax from $4.4 million in taxable income, off the back of $136.7 million in total income.
Among the companies that have previously come under scrutiny for the amount of tax they pay locally is Microsoft, which paid $42.3 million in tax from taxable income of $141 million and total income of $776.5 million.
To compare, SAP Australia reported a total income of $950.2 million and taxable income of $7.9 million, paying $965,836 in tax.
Google Australia paid $16 million in tax for the year, off the back of taxable income of $121.9 million and total income of $501.8 million.
Apple, which reported a total income of $7.57 billion during the year, claimed taxable income of $393.3 million and paid $117.9 million in tax.
Samsung Electronics, by comparison, reported total income of $2.5 billion and a taxable income of $12 million, paying $3.6 million in tax.
Below is a compiled list of the tech companies that claimed no tax payable in FY2015-16 (in alphabetical order):
It should be noted that it is highly likely a number of the companies in the list that reported taxable income of zero did so because they also reported a net loss during the period.
However, these figures have not been broken out by the ATO for the purposes of the transparency report.
While the ATO’s report highlighted a number of big tech companies and other businesses that paid no tax during 2015-16 despite claiming a taxable income, Deputy Commissioner, Jeremy Hirschhorn, suggested Australians should be confident that companies are being required to pay the right amount of tax on their Australian profits.
“In the last financial year alone, we issued more than $4 billion in amended assessments relating to prior years to public groups and multinationals, and we have already issued a further $1 billion in amended assessments this financial year,” Hirschorn said. “These amounts are not reflected in the corporate tax transparency data.”
“This is being achieved through the establishment of the Tax Avoidance Taskforce, and the introduction of new laws such as the Multinational Anti-Avoidance Law (MAAL), the Diverted Profits Tax (DPT) and Country-by-Country reporting (CbC).
“In addition, we expect to begin to see the impact of the MAAL in the 2016-17 data as companies restructure to comply with the requirements of the new law,” he said.
In the coming years, according to Hirschhorn, the ATO’s data is expected to reflect an estimated $7 billion each year of increased sales returned in Australia as a result of the operation of the MAAL and the restructures made by companies to avoid paying the DPT.
“Increasingly, the data will also reflect our approach to resolving past matters in requiring future compliance to be ‘locked in’,” he said.