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ATO: Do you believe in fair competition?

Jack Malarkey

Well-Known Member
From the Australian Taxation Office’s Small Business Newsroom:

Do you believe in fair competition?

2 July 2019

Running a business takes a lot of hard work and dedication, and most people genuinely try to do the right thing. Businesses that don't do the right thing can gain an unfair competitive advantage.

The Tax Integrity Centre launched on 1 July as a single point of contact so you can easily report:

phoenix activity (a new company is created after deliberately liquidating to avoid paying debts such as taxes, creditors and employee entitlements)

tax evasion

black economy activity (such as not declaring all income or paying employees cash in hand).

Black economy activities are unfair and affect businesses, workers and the community. Imagine if:

a business owes you money and then liquidates, only to be 'reborn' shortly after

a competitor undercuts you by offering lower prices because they're not meeting all their tax and super obligations.

Everyone needs to play fair and meet their obligations. If you think (or know) something is going on that isn't quite right, visit the Tax Integrity Centre and make a tip-off – we all have a role to play.

Next step:

Making a tip-off: https://www.ato.gov.au/general/gen/making-a-tip-off/

Find out about:

Tax Integrity Centre: https://www.ato.gov.au/General/Black-economy/In-detail/Tax-Integrity-Centre/

The black economy explained: https://www.ato.gov.au/General/Black-economy/The-black-economy-explained/


(https://www.ato.gov.au/Newsroom/smallbusiness/General/Do-you-believe-in-fair-competition-/?sbnews20190710)
 
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WestSydGuy

Well-Known Member
Hmmm, I think Raiser Pacific Ltd are siphoning profits overseas for “licence fees”. They are also trading as “Uber” :smiles:
 

Jack Malarkey

Well-Known Member
  • Thread Starter Thread Starter
  • #5
Hmmm, I think Raiser Pacific Ltd are siphoning profits overseas for “licence fees”. They are also trading as “Uber” :smiles:
There’s nothing inherently wrong with an Australian company paying licensing fees to an associated foreign entity. The problem arises if the amounts paid are commercially excessive.

If they are excessive, the Tax Office can be expected to challenge the amount of the deductions.
 

WestSydGuy

Well-Known Member
Well, let's see what happens to this:


Uber makes $785 million in Australia in 2018 – but pays just $8.5 million tax
IMAGE: HTTPS://SECURE.GRAVATAR.COM/AVATAR/FB0CB8396E589C548D6AB7A5D34CD2F4?S=32&D=MM&R=G


MICHAEL BAILEY, AFR.COM
MAY 2, 2019, 11:15 AM

Uber’s local arm made a gross profit of $785 million connecting Australians to rides and restaurant meals in 2018, but most of it was wiped out by a service payment to its US parent, and it paid just $8.5 million in company tax.

Uber Australia Holdings, which combines four entities supplying the local ridesharing and UberEats meal delivery services, and the marketing supporting them, made an after-tax loss of $13.2 million, despite revenue from contracts with its driver and restaurant partners of $935 million.

A $691 million “service fees” charge, otherwise unexplained in the accounts, did most to reduce the company’s taxable income.

The loss revealed in accounts lodged with the corporate regulator on Wednesday are in step with losses its parent, Uber Technologies Inc, outlined in filings for a $12.8 billion initial public offering last week, which nevertheless was quickly oversubscribed.

Despite dominating the ride-hailing market in many countries, Uber Technologies lost $1.5 billion in the March quarter, and $2.5 billion in 2018, as it invested heavily to expand in logistics and other transportation businesses, including scooters, autonomous driving and mass transit.

Tax-reducing tactics under fire
However with no such research and development occurring in Australia, the company’s local tax bill is likely to face scrutiny alongside those of Facebook and Google’s local subsidiaries.

On Tuesday they both lodged 2018 financial reports where most receipts generated from Australians were funnelled offshore, with the tech giants explaining the tax-reducing behaviour as fair payment for services rendered by other subsidiaries.

However critics have pointed out that most of the money Australians paid for Google advertising in 2018 went straight to its subsidiary in Singapore, which levies 17 per cent corporate tax against Australia’s 30 per cent.

The accounts of Facebook and Uber did not reveal where the large service fees were paid. However Uber Australia Holdings’ immediate parent is based in the Netherlands, a country fighting to improve its past reputation as a tax haven.


Read more at https://www.afr.com/technology/technology-companies/uber-australia-makes-785m-pays-8-5m-tax-20190501-p51j62#s0xDhfcE5GwZ8hkr.99
 

UberDriverAU

Well-Known Member
There’s nothing inherently wrong with an Australian company paying licensing fees to an associated foreign entity. The problem arises if the amounts paid are commercially excessive.

If they are excessive, the Tax Office can be expected to challenge the amount of the deductions.
If you wouldn't enter the same arrangements with an entity that wasn't associated, that's when the ATO will step in. As the likes of Chevron have found out.
 
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