IBM, Atlassian, Schneider avoided paying the Australian Taxation Office in 2016

IBM, Schneider Electric, Atlassian and Canon were among the technology companies that avoided paying tax in 2016 despite generating taxable income.

The Australian Taxation Office released its latest transparency report, revealing the tax bills of more than 2000 big companies operating in Australia.

The list covers some 1693 Australian public and foreign-owned companies with incomes of $100 million or more as well as 350 Australian-owned resident private companies with an income of more than $200 million.

More than 700 of these companies paid no tax in Australia in 2016.

The report includes many well-known IT companies operating in Australia, including vendors, solution providers and distributors.

Those that did not pay tax despite generating profit can expect to attract the greatest scrutiny. These companies included:

• IBM Australia & New Zealand, which generated revenue of $3.6 billion and had $23.4 million of taxable income. This week the Australian National Audit Office revealed that IBM had earned the most money in federal government IT contracts of any technology supplier, at $2.1 billion since 2012-13.
• Australian-born software developer Atlassian, which turned over revenue of $600 million and had taxable income of $87.4 million. 
• Schneider Electric Australia Holdings, which had a taxable income of $72.4 million on $1.4 billion in revenue.
• Canon Australia, which reported revenues of $783 million and $36 million in taxable income.
• Perth-based ASG Group, which had revenue of $189 million and $15.7 million of which was taxable.
• Citrix Asia Pacific, which generated revenue of $307.5 million and $9.8 million of taxable income.
• Unisys, which reported revenue of $207.1 million and taxable income of $1.5 million.

ATO deputy commissioner Jeremy Hirschhorn said most large companies were paying the right tax amounts and doing so voluntarily.

According to the tax office, not paying tax did not necessarily indicate wrongdoing. In any given year many major companies make losses, both for tax purposes as well as accounting purposes.

“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. These amounts are not reflected in the corporate tax transparency data,” Hirschhorn said.

The government has launched a number of initiative to crack down on tax dodgers, including the Tax Avoidance Taskforce and the introduction of new laws, including the Multinational Anti-Avoidance Law (MAAL), the Diverted Profits Tax (DPT) and Country-by-Country reporting (CbC).

Hirschorn said the ATO expects "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".

Several major Australian IT businesses did not pay tax because they did not generate any taxable income.

These included distributors Ingram Micro and Hills, with $2.04 billion and $309 million in revenue, respectively.

Loss-making solution providers included Capgemini, which brought in $274 million in revenue, CSG Limited ($122 million revenue), Dimension Data ($1.22 billion revenue) and NEC Australia ($443 million revenue).

Vendors that did generate any taxable income included Acer ($283.4 million revenue), Fuji Xerox Asia Pacific ($135 million revenue), Infor ANZ ($105 million revenue) and MYOB ($295 million revenue).

As for loss-making telcos, these included iiNet ($197 million revenue), NBN Co ($460 million revenue) and Vodafone ($4.2 billion revenue).

Many major ICT companies paid the statutory 30 percent tax rate, including Telstra, which  generated revenue of $27.9 billion and paid $1.74 billion in tax on taxable income of $5.98 billion. 

Data#3 posted revenue of $978.2 million, taxable income of $19.8 million and paid $5.6 million in tax. 

Global technology companies have in the past come under ATO scrutiny for their use of transfer pricing to reduce taxable income in Australia. Microsoft, Google and Apple all fronted the Senate Committee on corporate tax avoidance in 2015.

According to the ATO's 2015-16 transparency report, Microsoft paid $42.3 million in tax at a rate of 30 percent, on taxable income of $141 million in the region. The software vendor had Australian revenue of $776.5 million.

Cisco, which had revenue of $1.7 billion, paid $17.3 million of tax on taxable income of $59.2 million.

Apple, which reported revenue of $7.5 billion, paid $117.8 million based on a taxable income of $393 million. The iPhone maker's margin of taxable income to revenue was just 5 percent.

Other companies paid some tax, but found ways to reduce their bills to less than the statutory 30 percent company tax rate.

Google, for instance, turned over $501.8 million and paid $16 million in tax on taxable income of $122 million – an effective tax rate of 13.2 percent. 

CSC turned over $725.3 million in revenue, had a taxable income of $2 million and paid $174,477 in tax – a rate of 8.8 percent.

Amaysim turned over $254.1 million in revenue, had a taxable income of $10.7 million and paid $690,045 in tax – a rate of 6.4 percent.

Macquarie Telecom had a tax rate of 6.7 percent. The publicly listed telecommunications provider had 2016 revenue of $203.7 million, taxable income of $13.9 million and paid $929,488 in tax.