https://www.adaniaustralia.com/projects-businesses/abbot-port
Probably no profit as ‘Adani’, but certainly profit producing operations prior to offsets, if only since 2016 (2011?)
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I had forgotten about the port…I was only considering the mine.
The port operations are a different company to the mine. Digging deeper, the port may not be in profit as there is information indicating that the operations are highly leveraged.
Taking the port under its wings may be a strategic move, rather than to generate profits. Strategic being giving them unfettered access to loading/shipping their own coal.
It is yet another technique to put profit where it has the least tax or highest corporate benefit by incestuous operations across multiple operating companies. The mine could pay the port top dollar to minimise it profit for taxation, or it could pay bottom dollar for ‘Adani’ to maximise its profit from coal and to take advantage of mineral benefits, or any or all combinations thereof. Just speculating, but the aroma gets pretty far south.
The article does indeed support the skilled accountants etc helping to muddy the tax payable:
"
Key points:
- The ATO’s corporate tax transparency data again shows that hundreds of companies have been able to reduce their tax bills to zero
- ATO deputy commissioner Rebecca Saint said the agency was still seeing some companies avoid tax by shifting profits offshore
- Company financial accounts do not always give the full picture of tax positions and the ATO wants companies to be more transparent
"
& further
"
She [ATO deputy commissioner Rebecca Saint] told ABC News there were still instances of outright tax avoidance, in which multinationals attempted to shift profits outside of Australia to reduce their local taxable income, and these often resulted in the ATO’s Tax Avoidance Taskforce specialist teams undertaking audits.
“The positive trend we are now observing is that many companies have ceased generating accounting losses, and are now offsetting profits by utilising losses from prior years,” Ms Saint said"
& again
"
While more than 170 large corporate groups have signed up to the Board of Taxation’s Voluntary Tax Transparency Code, many companies still do not give detailed information about their tax affairs.
Second commissioner Jeremy Hirschhorn has previously made public comments noting that the corporate tax transparency data offers limited information which is hard to reconcile with accounting information in company financial reports.
Business asks, what’s a tax haven?
The financial reports often give limited insight into a company’s Australian operations, and Mr Hirschhorn has called on companies to be far more transparent, including by providing more details about money flowing offshore to related entities in financial and/or other reports.
The ATO notes several limitations in its data. First, the 2,214 corporate tax entities are not necessarily standalone entities and are sometimes part of a group of entities"
So Tax transparency is voluntary by Companies ie the need to disclose so Taxes can be calculated by the ATO. I understand we as individuals aren’t allowed to be voluntary in our disclosure, I think it is an offence isn’t it to hide our tax obligations?
They are calling on Companies to be more transparent…The ATO can’t reconcile the data because the Companies don’t want to disclose…So basically they ask them nicely “Please advise us of your data if you like so we can work out your tax debt, but if you don’t that’s ok”
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Yes it is. Tax deducted is calculated on the gross pay in the weekly pay packet. At least for the every day PAYE employee and typical tax payer.
Done some over time last week? No pro rata on the tax year to date. The tax deducted is grossed up as if that is your earning rate for the whole year. The Medicare levy is also added while super contributions are taxed at a lower rate. No net calculation required.
At the end of the year any bank interest is added to the gross income, but the costs of investing those savings in a term deposit etc are not deductible. Invested in shares. Dividends are also added to gross personal income. The purchase costs of shares are considered capital and not deductible when they are incurred. The tax deductions for the average tax payer are minimal. The difference between gross and net is rarely significant. Although any adjustment comes long after the tax has been paid. Worse still overtime has likely been over taxed initially.
I’m happy to agree on the end point having a small, difference between gross and net. But after all, this is just an adjustment after the fact. The average tax payer pays tax based on each week, fortnight or monthly pay gross amount. This is a long way removed from how any tax registered business, partnership, family trust, registered private company or
public listed company is treated in the tax system.
The whole purpose of any enterprise is to make a profit. And according to ASIC to always trade cash positive, and to never be in a position of trading insolvent.
It’s a great question to ask. Whether any enterprise is worth supporting if it is not able to turn an operating profit? Employees pay personal tax in return for the government services and investments we all benefit from each year. Even a new business in the first year of existence is drawing on public resources. Is it wrong to expect enterprise to contribute a fair share to the public purse on a pay as you go principle? They are after all supposedly responsible corporate citizens? 
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A very broad discussion on the Adani Coal project. Perhaps a complementary view point, or for some an argument that it is a very poor national investment for many reasons.
Quote:
Yet the claims made about Carmichael’s economic benefits are highly questionable. When asked in court in 2015, Adani’s financial controller, Rajesh Gupta, not only conceded that government revenue from the project was unlikely to exceed $7.8 billion, he repeatedly declined to rule out taking advantage of tax minimisation schemes to shift potential profits offshore to tax havens and lower-tax jurisdictions such as Singapore. Other witnesses, such as energy analyst Tim Buckley, went further, arguing that Adani was “going to lose money at … the operating level [so] it actually won’t pay any tax”.
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Yes, weekly take home pay is based on the gross salary earned…however…,that is not the full story…
At the end of the financial year, one can claim a number of deductions which are employment related costs, investment costs (inc. super) and/or tax return related costs. These are removed from the annual gross salary and the tax is recalculated based on the net income (gross less deductions or net income). The total annual tax due is then calculated using the marginal rates, and if one has paid more tax (than paid by one’s employer weekly), then one will receive a refund. If one has had additional income, say through investments, through out the year and their tax liability is greater than the income tax already paid, then one needs to pay the ATO the difference.If individuals only paid tax on gross income, there could be an argument to do away with tax returns.
Businesses of any size are similar, and costs of doing business (or like an individual the costs associated with employment) are deductible and come of the gross profit (comparable to the gross income of an individual). If the costs of running the business exceed the gross income, then a loss is incurred. Some individuals structure their taxes such that the deductions are high (say through interest payments on investments or investing in loss making enterprises) to minimise the amount of tax they pay.
This is very interesting…as there are many companies which are supported either by individuals, investors, hedge funds or the finance industry and have been running at net losses for many years. A good example is the tech industry where companies make many company vision statement/forecasts, and these are usually to maintain investment in the business. Take Telsa for example, it has made many forecasts about its business and potential tech developments, and it is yet to really operate year on year profitability. Telsa has many supporters as they believe that if some of the forecasts come into fruition, then it will add value to Telsa and hence increase the company value. Telsa value is principally based on tech or research development rather than profits (like may tech companies)…and with hope that one day it will become profitable (won’t need ongoing financial support from its backers).
Even if this does occur, in Queensland they can’t avoid paying coal royalties to the State government. Royalities paid based on production irrespective of whether the company makes a profit.
The Commonwealth government would however would not receive any company tax.
I thought I already said that. Although for the majority there are few deductions to be had. I guess it depends on who we each know best as a cross section of the community as to perception. Our sons all close to their 30’s with higher education qualifications rarely get any tax back. Most employers are required to meet all work expenses. Some tools of trade are the exception.
It’s worth considering just how much of the tax burden comes back to individual tax payers, directly and indirectly.
Individual income tax, gst, and the tax on super, the Medicare levy and HELP debts also get added on to the year end tax assessment/adjustment.
For the greater majority of wage and salary earners any refund is a minor consideration. The deductions most claim come to a small or modest amount.
For the 2016-2017 tax year the ATO indicated.
- 13.9M individual returns lodged.
- 10.7M individuals received a refund
- $1,399 the median refund, IE half or 5.3M tax payers received this amount or less as a refund long after paying their tax up front on gross income.
- 2.2M individual tax payers owed the ATO an average of $8,886 each!
- 1.0M at a guess had no adjustment
We can each make what we like of the data. Put simply the Australian Commonwealth Govt tax system is heavily dependent on personal income and expenditure for its revenue.
The average wage and salary earner gets minimal benefit from deductions, to reduce gross income significantly.
$271B paid in individual, Gst and Super taxes in 2016-16; vs $76B paid in company taxes.
If the significant majority of company turnover was contained and taxed in Australia, perhaps the arguments about the balance and equity would be simpler. That large multinationals are able to profit shift from the source of the income (Australia) to another country (supplier) is the original thrust of the topic.
That such practices place additional burdens on those who do pay tax fairly in Australia (individuals and some corporates) deserves to be called out.
P.S.
Any one who has run a family business, operated a registered Pty Ltd, or held an interest in a family trust, and has also worked in the everyday PAYE wages world knows the two are very different in so many ways. There are also sophisticated (not your average mum and dad investors) who run larger investment portfolios and work for no other. The tax benefits of cross ownership of assets and well structured SMSF are well out of the reach of the average investor. If for no other reason than the scale of investment and net income required to sustain the overheads of accountants and business/trust entities.
Large companies, private or public listed simply expand on the opportunities to minimise tax paid in Australia. It perhaps also explains the dominance of accountants and lawyers in key corporate executive and directors roles. Something that has a parallel in the backgrounds of many of our politicians.
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Not so. The net effect of the GST is that companies don’t pay it.
More specifically, a company gets back “GST paid minus GST collected” if this is a positive amount and pays up “GST collected minus GST paid” if this is a positive amount.
It is plausible that, for a project at this stage, GST paid is larger than GST collected, so they are just paying it out and getting it back.
As an added detail, they would not be collecting GST on (future) international sales. So GST paid may remain permanently larger than GST collected even when the mine is operational.
GST is intended to be an end-user tax only. That’s you and me.
In a broad sense, yes. They are contributing to the Australian economy by employing people in Australia. It is arguable as to exactly who is paying that tax though.
It is more definite that Adani is or will be paying Payroll Tax.
Adani will also be paying royalties once the mine is operational.
However if it is the Federal government complaining (it isn’t, it is the ill-informed media) then all of GST, Payroll Tax and royalties go to the states, not the feds.
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Nail.on.head - people will indeed “use” the data to further their own arguments.
I wonder where sole traders sit in that breakdown, as they straddle the line between individual and business. Similar question re partnerships. I would guess that both are counted as “individual” (as neither is incorporated), which would then distort the figures somewhat.
Because of the imputation credit system, if a company has Australian shareholders and if the company has profits to be taxed and distributed (i.e. not investing surplus cash in the business), it doesn’t so much matter what the corporate tax rate is - except to influence your diagram.
If the company has a higher tax rate, the government will get some money earlier but may have to give it back to the shareholder. If the company has a lower tax rate, the government will not get as much money when the company pays tax but the shareholder may have to pay the difference later.
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Multinational Anti-Tax Avoidance Laws clawing in a few dollars. Every little bit helps.
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What a surprise, this. not.
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The Companies have much vaster coffers and numbers of Lawyers etc on the payroll to fight these fights, often it is an agreement reached that the ATO expects because they can’t win the battle. The MNs pay a little more Tax long term, the ATO accepts the smaller long term take and the public are left holding the can.
Google’s settlement (not a Court win) payment to the ATO as an example sounds like a large amount until you understand it only means about $49 million a year for the 10 years the ATO was billing them for. Not a huge payment in contrast to their takings over that 10 years from Australia. Currently around $4.2 Billion in revenue collected here each year by Google that is $4,200 million. With creative and allowed cost accounting it means they generate almost a paltry $125 million profit out of that revenue. What needs changing is the Tax law to really address this obscure accounting so that “real” profits are disclosed. The ATO with this win states they have clawed back 1.25 Billion in total…yep for 10 years of almost it seems unabated large profit taking. So $1.2 billion for 10 years means about $125 million a year in total for all these huge companies. A paltry sum in terms of the billions leaving our shores.
From an article (linked in the Banking topic by @PhilT) about the Iceland Bank collapses is this intriguing look at Multinationals and their businesses:
““We used to have multinational companies - many of them have left. If you were to found a company in Iceland now which was focused on international markets, you would soon take it out of the country, because you would not want to be locked in our capital controls””
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IKEA reports another loss for its Australian operations.
Gotta love the old tried and tested offshore transfer pricing
Their parent company is based in the Netherlands, as was the former Australian radiocommunications division of Philips who also never made a profit in Australia as all the design and administration expenses charged by the Dutch parent company eliminated any Australian profits.
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Indeed, it’s not a surprise.
- It is inherent in our system of government that you are entitled to your day in court, where an impartial party will judge the merits of the ATO’s decision. Noone could seriously believe that the ATO is itself impartial. They can see only as far as their snout, like most organisations.
- The bigger the tax bill, the more it makes sense to dispute it. Even with a fairly abysmal, say, 10% chance of winning, it could still be rational to dispute the ATO’s decision.
Where the law is vague it is entirely appropriate for the ATO’s decision to be reviewed independently. Some “transfer pricing” rorting is obvious but at a certain point it is difficult to determine what is the absolutely correct transfer price to apply (probably no such price exists). I would guess that most obvious rorting is long gone.
You can bet that the ATO will be tempted to assume a lower correct transfer price and the company to assume a higher correct transfer price. There needs to be some independent means of resolving such a dispute.
Part IVA is even worse. When it all hinges on whether a “scheme” has been set up with the “purpose of obtaining a tax benefit” (typically, reducing income tax), you can bet that the ATO will be biased towards deciding that that is the case and that the company (or individual) will deny it vehemently. There needs to be some independent means of deciding that.
However just as a company can make a rational decision to dispute (or not dispute) an ATO decision, the ATO can make a rational decision to settle out of court.
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To be fair to Philips, it is a Dutch company - whereas a reasonable person might come to the conclusion that IKEA (hint: not a Dutch company) has a company in the Netherlands for the purpose of obtaining a tax benefit. 
In fact, have fun applying Part IVA to this: IKEA - Wikipedia
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A win for the ATO that will also set precedent.
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The irony is that the dual-listed structure is a historical relic from BHP’s largely temporary tie-up with Billiton.
I thought it was a merger, followed by two name changes? Nothing temporary.
Also nothing unusual for a major Australian focused company to have one or more offshore entities in the sales/marketing and or procurement chains.
How important is it that every one pays a fair share?
A very simple view of what the Commonwealth thinks!
Aside from the significant difference in value of the taxes collected from Companies and Individuals + Consumption (goods and services).
- The value of individual income taxes collected increased approx 50% in 7 years to 2018.
- The value of taxes collected on goods and services (mainly GST) increased approx 40% over the same period.
- We are all free to speculate as to why enterprises picked up less of the load from 2012-13 for the 3 years up to 2016?
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It isn’t only corporations who are in on the dodge:
