The ATO’s move yesterday to make public its list of companies operating in Australia which failed to pay tax in 2013-14 has been nothing short of fascinating.
Media and marketing organisations, as well as some of the larger consumer brands that AdNews reports on, listed as having a blank space in 'tax payable' included: APN News and Media; Nova Entertainment; David Jones; IbisWorld; Foxtel Cable TV; Fremantle TV; Mondelez; News Australia/News Pay TV/News Investments; Qantas; Ten Network Holdings and Vodafone.
The blank space listed next to a company in the ‘tax payable’ box can occur for a number of reasons: either because the organisation did not pay any tax, had offsets against profit that reduced its tax bill to zero, or, the company made a loss.
Vodafone, for example, revealed that it is subject to tax deductions because of contributions it makes to government for the ability to run on the mobile spectrum.
“These deductions,” it said, “together with high operating costs, are the reasons corporation tax was not payable in December 2013.”
By way of comparison, Vodafone rivals Optus and Telstra paid out some of the highest tax sums of any other companies operating in Australia. Optus (Singapore Telecom Australia) paid out $238 million on total income of $8.57 billion, while Telstra racked up a huge $1.74 billion tax bill on income of $26 billion and taxable income of $5.9 billion.
News Corp runs three listed companies in Australia. News Australia reported income of $2.8 billion for the 2013-14 period, while News Pay TV reported income of $188 million. Neither company reported taxable income, or paid any tax.
Interestingly, News Australia Investments reported income of just over $1 billion, taxable income of $97 million and paid out just $4 million in tax.
As AdNews understands it, News Corp therefore contributed $4 million in tax in 2013-14 to the Australian government.
When questioned, the company fired a text message over to AdNews saying: “We won’t comment but thanks for the opportunity.”
Ten Holdings and Qantas, meanwhile, posted losses in the 2013-14 financial year and were therefore exempt from any tax payments.
This serves to further highlight the sharp turnaround witnessed by Qantas which only this week issued a statement to the ASX that said it expected profits before tax to be in the $875 million to $925 million range.
Mondelez failed to address exactly why the ATO issued a list with a blank space next to its name, but issued a statement to AdNews saying, “In common with all global businesses, we pay corporation tax based on the laws of the countries in which we operate.
“Globally we pay hundreds of millions of dollars in corporate income tax annually and we comply with all applicable tax laws in Australia."
Failing to pay tax is undoubtedly the headline-grabber, but the document bears deeper scrutiny and it proved interesting to look at the companies which did pay tax, albeit an amount which raises eyebrows.
For example, Lenovo paid $39,700 on taxable income of $132,000 while total income was registered as being $372 million. Google paid $9.2 million on taxable income of $90.8 million while total income came in at $357 million. Apple paid $74 million in tax on $247 million, while total income was $6.1 billion.
Tax, and particulalrly the amount of tax paid by large multinationals operating in Australia that appears to be less than befits organisations of their scale, has been a contentious issue over the last two years with companies including Google, Apple and Microsoft often said to be involved in tax avoidance.
Earlier this year, the Australian government held an inquiry into the tax affairs of many multinational companies including News, Apple and Google which were required to give evidence at a Senate hearing. This report by the ATO is among the measures implemented to help government keep track of potential tax avoidance.
As yet, the remaining companies originally listed have failed to respond to enquiries from AdNews, but we will update when they do.
Email Nicola at nicolariches@yaffa.com.au.