Accounting tricks are helping Big Tech firms avoid paying tax on up to 96.6% of their Australian income, according to a new analysis of Australian Taxation Office (ATO) figures that showed Apple was the worst offender when it came to corporate tax minimisation.

The tech giant took $9.3 billion from Australian customers during the 2021-22 financial year, making it Australia’s 21st largest company by revenues – on par with AGL Energy and Suncorp, and eclipsing the likes of Westpac Banking Group, JB Hi-Fi, Brambles, Medibank, and Atlassian.

Despite its strong financial position, the company alleged in its tax filings that $8.88 billion of that money – 95.4% – was not taxable, putatively by claiming deductions for expenses such as wages, property leases, infrastructure operating costs, and local investments.

Apple ultimately paid just $137.3 million in tax that year – the standard 30% of companies’ taxable income but just 1.5% of its gross Australian revenues – and even that was higher than the 1% of Australian revenues that the company paid as tax during fiscal 2016-17.

The figures – which were collated and analysed by the Sydney Morning Herald based on data published in ATO Corporate Tax Transparency Reports (CTTR) – paint a damning portrait of Big Tech multinational companies (MNCs) that have long used accounting acrobatics such as the ‘double Irish’ arrangement to pay a fraction of the tax that their customers do, all while funnelling the remaining profits into the pockets of global shareholders.

Other tech firms have worked equally hard to minimise the tax they pay in Australia, with Facebook last year paying just $30.18 million in tax – just 2.6% of its annual revenues of $1.15 billion – after declaring that 91.2% of its income is not taxable.

Google, and its new accounting entity Google Cloud Australia, paid $90 million in tax together based on income of $1.892 billion – an effective tax rate of just 4.8%, with the company claiming that around 80% of the units’ income was not taxable.

And Microsoft, which took $6.3 billion from Australian customers during fiscal 2021-22, told the ATO that 93.6% of that was not taxable – ultimately paying just $120.28 million, for an effective tax rate of 1.9% of gross profits.

Microsoft’s newest accounting entity, called Microsoft Clipchamp Holdings, made an additional $210.8 million during fiscal 2021-22 but paid just $17 in tax on taxable income of $57 – likely revealing the price that the tech giant paid to acquire Brisbane video startup Clipchamp during that year.

Tech companies are far from the only companies sidestepping their tax obligations: more than 800 large companies paid no tax during fiscal 2021-22.

It’s a fact of which the ATO is not only well aware, but explains by highlighting the potential “valid reasons” why most of the money they make ends up not being taxed, including capital investments or “when economic or environmental conditions reduce their income or increase their expenses….. even large corporates will sometimes incur a loss in a particular year.”

Paying their fair share

With the ATO’s voluntary Tax Transparency Code (TTC) requiring reporting by businesses with Australian turnover of $100 million or more, the tax minimisation tactics used by other Big Tech MNCs and large conventional businesses have become far more obvious in recent years – triggering dramatic change after it was revealed that consulting giant PwC was both helping government rewrite the tax code and actively working with big business to develop accounting structures that would minimise the tax they pay under that code.

Last year, Treasurer Dr Jim Chalmers announced “the biggest crackdown on tax adviser misconduct in Australian history,” with a package of measures focused on strengthening the integrity of Australia’s tax system, increasing regulator powers, and strengthening regulatory arrangements “to ensure they are fit for purpose.”

Those measures will increase penalties for tax advisor misconduct and the promotion of tax avoidance, as well as reviewing ATO information-gathering powers and regulation of accounting and auditing firms, and facilitating investigations of breaches and removing problematic measures that have impeded enforcement in the past.

“Tax agents and others who advise their clients to avoid Australia’s tax laws must be penalised,” Chalmers said, noting that current laws punishing such conduct are nearly two decades old “and have only been applied six times.”

More recently, the government released exposure draft legislation and subordinate legislation to follow through on Budget promises to impose a minimum 15% tax rate on multinationals with annual global revenues of at least $1.2 billion (€750 million).