Tax time for tech titans in govt transparency report
- 09 December, 2016 15:22
Dicker Data, Distribution Central, Ingram Micro, and Hills were among the Australian Taxation Office’s (ATO) list of companies operating in Australia that paid no tax in the financial year ending June 2015.
On the vendor side, the distributors were joined on the list by Citrix Systems, Emerson Network Power Australia, Fuji Xerox Asia Pacific, Hewlett Packard, IBM A/NZ, NEC Australia, and Schneider Electric Holdings.
Meanwhile, the IT partners named on the list of companies that paid zero tax in 2014-15 included Dimension Data, Capgemini Australia, and CSG Limited.
The ATO’s latest 2014-15 Report of Entity Tax Information corporate tax transparency report, released on 9 December, revealed that more than a third of over 1900 of the largest companies operating in Australia paid no tax in 2014-15.
The report looks at Australian public and foreign-owned companies with an income of $100 million or more, and Australian-owned resident private companies with an income of $200 million or more.
The companies covered in the transparency population account for $42 billion or around 63 per cent of total company income tax payable for 2014-15.
Enterprise technology companies, both locally-owned and international, claim a heavy presence on the list, with several big name players paying zero tax for the year ending 2015.
IBM A/NZ Holdings, for example, reported an income of $3.6 billion, and taxable income of $49.3 million, but had zero payable tax during the period.
By contrast, electronics retailer, JB Hi-Fi Limited, claimed a $3.5 billion income, with $205 million taxable income, and paid $61.5 million in tax.
Likewise, Hewlett Packard South Pacific had an income of $3.5 billion, but claimed no taxable income and zero tax payable.
At the same time, Dimension Data Australia claimed at income of almost 1.2 billion for the year, but had no taxable income and zero payable tax during the year. Ingram Micro, with an income of $1.75 billion, also claimed no taxable income and zero tax.
By comparison, Fuji Xerox Australia also had an income of $1.2 billion, but claimed a taxable income of $82.4 million, and paid $18.4 million in 2015.
Local publicly-listed technology distributor, Dicker Data, claimed an income of $447.2 million for the year, yet had no taxable income and no tax bill.
Distribution Central, on the other hand, reported an income of $292 million, with a taxable income of $9.4 million, and $2.5 million in tax payable.
This is the second such annual corporate tax transparency report, with the ATO releasing the first – for 2013-14 – last year. The reports come as a result of laws passed in Parliament by the previous Labor government, requiring the ATO to share the information.
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.
While the list highlights dozens of companies that paid no tax, and even more that paid well below the 30 per cent corporate tax rate, the ATO stressed that a zero or low tax rate did not equate to tax avoidance.
“This data doesn’t tell the whole story of a company’s tax affairs but is an important first step in influencing corporate transparency,” said Commissioner of Taxation, Chris Jordan, in a statement.
“No tax paid does not necessarily mean tax avoidance; even companies with very high total income sometimes make losses and you will no doubt recognise some large Australian organisations on the list that fall into this category, Qantas for example.
“As we have explained in our contextual material on ato.gov.au, there are many legitimate reasons why this might be the case.
“These companies may have incurred an accounting and tax loss in the current year or in prior years, and are now using those to reduce current taxable income. Many companies are now publishing information describing any losses or other economic factors that contribute to their taxable position,” he said
Among the companies that paid zero tax due to reported losses during the period were Acer Computer, which had an income of $268.4 million, but no taxable income, Hewlett Packard, NEC, Ingram Micro, nbn, and Dimension Data, and Dicker Data, among others.
Other companies that appeared on the list were Avnet, which reported $530 million in income, with a taxable income of $8.5 million, and $2.5 million tax payable, and Acer Computer Australia, with $268.4 million in income had no taxable income or tax payable.
Abacus Group Holdings reported $109.6 million in income, with a taxable income of $13 million, and tax payable of $3.9 million, while Canon Australia had $780.6 million in income, and a taxable income of $41.4 million, with $1.3 million tax payable.
Cisco Systems reported a total income of $1.57 billion in Australia during the 2014-15 financial year, with a taxable income of $68.1 million, and $19.7 million in tax payable. And Capgemini, which reported $250.2 million income during the year, had no taxable income and no tax payable.
The second transparency report comes after some of the largest technology companies in Australia were questioned by the government during a series of parliamentary hearings by the Senate Committee inquiry into tax avoidance and “aggressive minimisation” by corporations registered in Australia and multinational corporations operating in Australia.
Apple, Google, and Microsoft were among those questioned during the hearings. The latest list reveals that all three of the tech giants are moving closer to paying Australia’s standard 30 per cent corporate tax rate.
In the latest list, Apple reported income of $8.3 billion, and had a taxable income of $488 million, with $146.3 million taxes payable, while Google Australia reported a total income of $438.7 million, with a taxable income of $106.1 million, and paid $12.2 million in taxes.
Meanwhile, Microsoft Australia, which reportedly became the first local branch of an international tech company to get on board the government’s Voluntary Tax Transparency Code in November, paid $33.3 million from $111.11 taxable income, off the back of $679.4 million in revenue.