The Australian Tax Office’s (ATO) release of the tax details of more than 1500 companies yesterday was surprising for the number of businesses unable to turn a profit, despite having billions of dollars in turnover.
And with no taxable income, they paid no tax at all. Of the 1500, 579 paid no tax in the 2013-14.
Equally surprising is that among the list are some of the biggest names in corporate Australia.
Some are easily explained. For example, Qantas, which topped the list of unprofitable companies despite $14.9 billion in income. The airline has undergone a massive restructuring in recent years as CEO Alan Joyce sought to turn around the business, which only returned to profitability this year, having posted a $2.84 billion loss in 2013-14, the financial year the ATO figures are based on.
Likewise rival Virgin Australia, which had a turnover of $4.3 billion, but was also posting losses as the two businesses fought fiercely for market share in an already troubled industry. Unsurprisingly, Tiger was the same.
As taxation commissioner Chris Jordan pointed out with the release of the figures, no tax paid doesn’t mean tax avoidance.
“Any companies with unusual financial or taxation numbers are closely investigated by the ATO,” he said, adding that around half of the 1500 businesses on the list have been audited in the past three years.
And a lack of profitability can be explained by a business being in an expansion phase, when investment is heavy, or facing disruption, such the media, and car industry, or falling commodity prices, such as mining.
Perhaps the biggest surprises on the list posting no taxable income in 2013-14 are ExxonMobil, which booked $9.6 billion in revenue, Lend Lease with $7.6 billion. Another developer enjoying the property boom, Mirvac, made no taxable income despite posting $1.7 billion in income. Another developer, Stockland, also failed on nearly $1.3 in income.
Another surprise is the Australian arm of global food giant Mondelez, owner of brands such as Kraft, Cadbury and Vegemite, which had $1.7 billion in income, but nothing left over that was taxable. Another food business with $1 billion in revenue, Goodman Fielder, makers of breads, margarines and praise mayonnaise, was the same.
The well-established corporate credit card business American Express suffered a similar fate, with $943 million coming in, but unable to produce a taxable income.
Others, such as Queensland-based miner GHP 104 160 689 Pty Ltd, which had the second biggest revenue at $11.7 billion for no taxable income, have been involved in a bitter dispute with the ATO over R&D claims.
While BHP and RIO are the nation’s top two taxpayers, and Andrew Forrest’s FMG makes the top 10, a number of mining businesses failed to post a taxable income, including Hope Downs Marketing, a subsidiary of Rio, with a $4.3 billion income.
Citic Resources, a Melbourne-based investment and commodities trading company, didn’t make any taxable income on $5.05 billion in turnover.
The list of miners failing to post a taxable income, despite generating billions include Glencore, Atlas Iron, Newman, Newcrest, Peabody Australia Holdco and Whitehaven.
Car makers General Motors, Nissan and Mitsubishi are among those who didn’t have a good year, along with alcohol businesses SABMiller and Pernod Ricard.
A number of smaller banks failed to produce a taxable income, including Lloyds and BNP Parabis.
Cleaning group Spotless, currently embroiled in a scandal involving subcontracted cleaners at Myer, was unable to produce a taxable income on $2.26 billion.
And department story giant David Jones, subsequently taken over by South African business Woolworths, had the same problem on $2 billion in turnover.
Even the monopoly ownership of Sydney Airport left the business unable to produce a taxable income from $660 million pouring in.
And while Rupert Murdoch’s struggling media business News Corp has been suffering massive change, leaving a lack of taxable income on $2.8 billion understandable, the failure of Foxtel, the News-Telstra joint-venture, which had $1.9 billion in income prior to Netflix arriving, to book no taxable income, may not bode well for the business as online streaming services disrupt the industry.
Business Council of Australia chief executive Jennifer Westacott said people should be careful not to misinterpret the figures released by the ATO.
“Many small and medium-sized businesses, in particular, do not make a profit in a given year, and even large businesses go through cycles where profits from large investments take time to be realised,” she said.
Westacott said within the OECD only Norway taxes companies more as a share of the economy than Australia.
Here are the top companies, by total income, who didn’t produce a taxable income in 2013-14.
* Editor’s note. An earlier version connected Citic Resources to joint-venture Chinese business MP and miner Clive Palmer has been in litigation with. That was incorrect.