Tax: a dirty word for Election 2022, page-46

lots to unpack here, but I guess if you throw enough darts at the board one might stick eh?

I've worked in seniors levels in Big 4 accountancy and multinational firms (both Australian HQ'd and overseas) - your starting premise is to be honest pretty far off the mark.. there are no secret set of books, most senior leaders from an operational level are assessed from a financial perspective based on management accounts, which stop at the EBIT level and also usually aggregate across various legal entities (and often even jurisdictions, depending on how the organisation is arranged).. statutory accounts, which are prepared at the legal entity level, are to be honest, cared about by very few people in large organisations, and no where near the c-suite level

obviously no company sets up shop to make continuing losses - all operations want to turn a profit. but short term blips happen, which depending on the market can last for a few years.. there's also often considerable capex spend involved due to the nature of our industries (Australia is a net capital importer, we need foreign money and can't fund out own projects), which depending on the industry can be brought forward in tax returns - tax will get paid, just a little later than when accounting profits start (and well after revenue first comes in).. the simple fact is, and you can use the major ASX indices to help, 30% of companies DO make economic losses in a given year. it's just reality, but difficult for certain aspects of the media to grasp (many of whom do not understand the difference between revenue and profit)

the news sources you are picking from were quick to jump on Qantas when it came out of the doldrums - OMG QANTAS ISN'T PAYING ANY TAX ON BILLIONS OF REVENUE AND ITS MAKING PROFIT!@#! - conveniently forgetting the billions it lost in the previous years, in real economic losses.. those losses needed to be recouped before tax got paid.. I don't know if QAN ever got back into a tax payable position, but Covid will have thrown a spanner in the works since

again, sorry to burst bubbles - but the object of transfer pricing is to ensure that tax is paid where value is created and assets are owned.. as a hopefully simple example - Apple pays a fairly low level of tax in Australia because it only sells the product here... there's not much value in that unfortunately, yes the staff wearing the same coloured shirts in the stores look fancy, but all that Australia will be entitled to tax from the cost of an iPhone is a slight mark-up on the salary & wage (even the way staff are presented, store layout etc - those ideas and know-how came from overseas).. all of the value in an iPhone is in where it's developed (USA) and to a lesser extent manufactured (probably China).. Australia will never get a big slice of that global tax pie, even though a large proportion of our population walks around with one in their pocket

you raise the marketing hubs of resource companies - yes there is/was a tax angle to some of those set-ups, but there were also significant commercial factors as well. mainly proximity to market (Singapore to China, Switzerland to Europe, I've never heard of an Irish market hub but I'll take your word on them existing) and concentration of specialists (but I'll admit, marketing staff are usually happy to move).. the staff headcount in some of the Singapore hubs you mention, at certain points in time, were larger than the multinationals own head office.. some companies have Singapore based marketing hubs where there is no tax advantage obtained (eg the profits are all attributed back into Australia - Australia can argue with Singapore over who gets what piece of the overall 30%)

but another thing to remember about the marketing hubs, is again that the level of overall profit retained in the hubs is small - you're usually talking about a 2 to 5% margin applied to the end customer price when comparable third party arrangements are referenced.. if I can use BHP as an example, yes the overall amount in dispute with the ATO looked scary and large (from memory it was around $400m), but that was built up over a 10+ year period.. the $30 to $40m per year in dispute needed to be contrast with the billions in tax it had already paid for each of those years in Australia.. the market hub issue was an argument around the edges - i.e. should BHP pay $20 or $20.20 of tax in Australia for every tonne of iron ore that left the Pilbara (totally made up numbers, but used to illustrate the insignificance)

if you're going to bring political parties into this mix - the marketing hubs were mostly put in place and the main disputes all came to light during the Rudd and Gillard labor years. what did they do to "stop" them? and what exactly should be done? I'm happy to hear ideas.. with the CFC rules Australia gets full 30% tax (albeit less foreign tax credits) for Australian owned market hubs.. those marketing people are located overseas, so that jurisdiction is entitled to some of the tax take also.. if you want all of the profit to be taxed here, then you need to make it compelling for industry to bring those jobs and roles onshore