The Turnbull Government

[Tisme]

ABC seem determined with the story:

http://www.abc.net.au/news/2018-02-14/why-many-big-companies-dont-pay-corporate-tax/9443840

 

[IFocus]

ABC seem determined with the story:

http://www.abc.net.au/news/2018-02-14/why-many-big-companies-dont-pay-corporate-tax/9443840

None of this is new and the twice Walkley Award finalist Alberici must be surprised at the political interference.
Given the absolute fascicle behavior of the LNP leadership nothing would surprise at the moment.

Love it how tosser Abbott throws in a hand grenade.....just trying to help out his mate Turnbull.

 

[moXJO]

ABC seem determined with the story:

http://www.abc.net.au/news/2018-02-14/why-many-big-companies-dont-pay-corporate-tax/9443840

Wasn't Qantas losing money for a period of years. Are they using examples where companies had losses in those years?

 

[Logique]

From no less a source than The Guardian

https://www.theguardian.com/media/2...alysis-after-complaints-from-malcolm-turnbull
...The ABC said the Alberici analysis piece had been removed because it did not meet editorial standards and further information and context had been added to the news story.
“On 14 February 2018 ABC News Online published two stories on corporate tax rates – a news story examining why some Australian companies do not pay corporate tax and an analysis of proposed changes to company tax rates,” a spokeswoman said.
“The analysis piece did not accord with our editorial standards for analysis content, and has been removed for further review.” The ABC has denied there was any pressure from the government ...

I recall Emma Alberici running with the headline, many big Aussie companies are not paying tax! Which at very least required the qualification, that many are carrying previous years capital losses

 

[SirRumpole]

Which at very least required the qualification, that many are carrying previous years capital losses

That was made quite clear in the article had you read it.

 

[Logique]

I saw it live on ABC TV. I don't recall any such qualification from Emma, which is the point here.

 

[bellenuit]

That was made quite clear in the article had you read it.

Yes but it seems obvious her intent wasn't to inform but to attack attempts to reduce the company tax rate (which btw I don't agree with, at least not as a priority). The headline (from your original post, not the revised one) implied that tax was not being paid, so a tax rate reduction is irrelevant. But that is truly rubbish as that is just a temporary situation for most companies currently paying no tax and will not be the case once they become profitable once again. QANTAS said that they expect to use up all their carry forward losses by next year.

The fact that Shorten tweeted the headline to attack the proposed tax cuts and Alberici then retweeted Shorten's tweet shows her intent with the article IMO.

Neither Shorten's tweet nor Alberici's retweet provided a link to the original article which they could have done if they wanted to add context.

 

[SirRumpole]

I saw it live on ABC TV. I don't recall any such qualification from Emma, which is the point here.

I also saw it on TV and I recall Emma saying that what the companies were doing were completely legal.

There should be a discussion on the appropriateness of indefinite carrying forwards of losses. Companies can borrow or issue shares to cover losses, the taxpayers don't have to contribute.

 

[Logique]

Cheers SR, noted.
Just introducing this article today, by John Hewson about Barnaby Joyce, link under, saying Barnaby cannot remain as Deputy PM

18 Feb 2018 - Joyce doesn't deserve to be deputy PM
By: John Hewson: http://www.smh.com.au/federal-polit...-deserve-to-be-deputy-pm-20180217-p4z0p8.html
Barnaby has only ever been for Barnaby – in life and in politics.
He has allowed his Nationals team basically to run amok over the past couple of years, ignoring government policy and responsibilities to cabinet solidarity, and to government unity, speaking freely on many issues, and on many occasions, notionally “in the interests of the bush”... Barnaby simply cannot remain as Deputy Prime Minister, irrespective of the Coalition agreement. He doesn’t deserve it on either merit or performance. If this requires the renegotiation of that Coalition agreement,
so be it ...

 

[bellenuit]

There should be a discussion on the appropriateness of indefinite carrying forwards of losses. Companies can borrow or issue shares to cover losses, the taxpayers don't have to contribute.

Nope. Borrowing or issuing shares do not cover losses. You are confusing losses with working capital.

 

[SirRumpole]

Nope. Borrowing or issuing shares do not cover losses.

Business is a risk, and shareholders know it.

 

[bellenuit]

Business is a risk, and shareholders know it.

Your model would mean the death knell of entrepreneurship. Nobody would start a business if losses cannot be carried forward (at least for a considerable number of years). A typical mining operation with limited life may incur losses for the first 10 - 15 years during the exploration and start up phase and only turn a profit in the last few years. If for example, the overall profitability of the mine is $1b over the life of the mine, a loss of $1.4b over the early years followed by a profit of $2.4b once production is in full swing, at a 30% tax rate and allowing losses to be brought forward, would mean 300m in tax and 700m in after tax profits over the life of the mine. Not allowing carried forward losses would mean tax of 720m and profit after tax of 280m over the life of the mine. An effective tax rate of 72% for the project.

You seem to hold the belief that the government is entitled to tax on revenue, not just profit. That is simply unjust. A tax year is just a construct making it easy for accounting and taxation purposes. A business is a long term undertaking and the accounting year is just a means of determining profits and tax at regular intervals.

Your proposal would create huge anomalies in taxation that are purely related to timing rather than fairness. One starts up a business and incurs huge start up costs in June say (training etc.), so they have a loss for that tax year. The following tax year the business is profitable. But if losses cannot be carried forward, then starting up the business in June would have a hugely different tax consequence to starting it in July, when the start up costs can be applied against that years revenue.

 

[SirRumpole]

Your model would mean the death knell of entrepreneurship. Nobody would start a business if losses cannot be carried forward (at least for a considerable number of years).

I'm just saying that it should not be indefinite. Five years would be reasonable. If a company can't get into profit in 5 years then it's probably not viable anyway.

 

[Smurf1976]

I'm just saying that it should not be indefinite. Five years would be reasonable. If a company can't get into profit in 5 years then it's probably not viable anyway.

Personally I think there’s too much focus on the short term already.

If anyone breaks even on the renewable energy infrastructure we need is less than a decade then they’ve either taken massive shortcuts or they’ve received a handout. Same with a lot of infrastructure - in some cases you’d be looking at a decade just to see any revenue and obviously a lot longer than that to be in profit.

That there’s so much focus on the short term is already a big problem from what I see. There aren’t many companies willing to take a 30 year view knowing that all the profit comes toward the end. If they couldn’t carry the loss forward then even fewer would be interested.

 

[SirRumpole]

If anyone breaks even on the renewable energy infrastructure we need is less than a decade then they’ve either taken massive shortcuts or they’ve received a handout. Same with a lot of infrastructure - in some cases you’d be looking at a decade just to see any revenue and obviously a lot longer than that to be in profit.

As far as infrastructure goes it's probably cheaper on the long term for governments to build it from borrowing then collect revenue in the long term rather than as you say giving handouts to corporations who will then avoid taxes as well to pay for their handsome profits.

It worked pretty well with the Snowy Mountains scheme.

 

[Tisme]

Newscorp would be fairly nasty on their inclusion:

https://thenewdaily.com.au/money/fi...ias-largest-companies-corporate-tax-10-years/

 

[bellenuit]

I'm just saying that it should not be indefinite. Five years would be reasonable. If a company can't get into profit in 5 years then it's probably not viable anyway.

Space-X and Tesla to name some high profile companies weren't profitable within 5 years. Probably most mining companies and half of all start-ups.

I simply don't understand why you think companies that cumulatively haven't made a profit since starting up should pay a tax. It's not as if they are leeching on society. They are employing people who pay tax, they are buying goods and services from other companies which in turn keeps others employed. They are providing a needed service. Taxing them is unfair until they make a cumulative profit. The fact that some companies only allow 20 years or so of carried forward losses doesn't mean it is fair. It's just government insatiable desire to tax, whether fair or not fair.

If they never make a cumulative profit and go bankrupt, then the investors lose out.

It is not the intention of companies to forever be unprofitable. They hope sometime to be cumulatively profitable and then they will pay tax. That is the sole purpose of entrepreneurship. They should be lauded not penalised.

The basic question is: why do you think it is right to penalise an enterprise that is doing the right thing for the country? The government isn't missing out on anything other than the mythical "lost revenue" which I explained before is the same as saying that because the tax rate is 30% and not 40%, the government is missing out on "lost revenue".

 

[sptrawler]

Space x and Tesla still arent profitable.

 

[bellenuit]

Newscorp would be fairly nasty on their inclusion:

https://thenewdaily.com.au/money/fi...ias-largest-companies-corporate-tax-10-years/

That seems to be basically the same article that was subsequently withdrawn by the ABC.

The problem with the table at the end is that a company, like an individual, doesn't pay tax on Total Income, it pays tax on Taxable Income, which is arrived at by subtracting allowable deductions from Total Income.

Unless they can prove fraud, one could equally say all those companies listed paid tax on their taxable income at the company tax rate of 30%.

 

[luutzu]

Your model would mean the death knell of entrepreneurship. Nobody would start a business if losses cannot be carried forward (at least for a considerable number of years). A typical mining operation with limited life may incur losses for the first 10 - 15 years during the exploration and start up phase and only turn a profit in the last few years. If for example, the overall profitability of the mine is $1b over the life of the mine, a loss of $1.4b over the early years followed by a profit of $2.4b once production is in full swing, at a 30% tax rate and allowing losses to be brought forward, would mean 300m in tax and 700m in after tax profits over the life of the mine. Not allowing carried forward losses would mean tax of 720m and profit after tax of 280m over the life of the mine. An effective tax rate of 72% for the project.

You seem to hold the belief that the government is entitled to tax on revenue, not just profit. That is simply unjust. A tax year is just a construct making it easy for accounting and taxation purposes. A business is a long term undertaking and the accounting year is just a means of determining profits and tax at regular intervals.

Your proposal would create huge anomalies in taxation that are purely related to timing rather than fairness. One starts up a business and incurs huge start up costs in June say (training etc.), so they have a loss for that tax year. The following tax year the business is profitable. But if losses cannot be carried forward, then starting up the business in June would have a hugely different tax consequence to starting it in July, when the start up costs can be applied against that years revenue.

Your example wouldn't work out so well "if" the company became profitable but decided it's more tax efficient to, let say, buy another loss-making mine somewhere and make another loss, again.

It's these kind of "losses" that the likes of Murdoch build their empire and pay no taxes. When one subsidiary makes a profit, they simply buy one or two other companies that aren't making any profit, negate the gains with the loss, carry them forward and voila... job creator, entrepreneurship.

And for those companies that doesn't buy loss-making businesses, or doesn't overload their subsidiaries with debt and interest, they simply set up businesses in Ireland and other tropical paradise.