Episode 432 – Aussie Tech Heads Shownotes

posted in: Show Notes

Apple plays hard ball at tax inquiry

Australian senators have lashed out at the local boss of technology giant Apple over a perceived lack of transparency in a committee hearing on tax minimisation yesterday.

Tony King, Apple’s managing director of Australia and New Zealand, joined executives from Microsoft Australia and Google Australia in front a senate committee investigating tax minimisation strategies.

The Google and Microsoft executives came clean on what portion of their local profits were booked overseas during the almost two-hour grilling, but King was widely criticised by the panel for refusing to reveal the details of Apple’s tax structure.

he said he was unable to detail what portion of the $6 billion revenue Apple booked last year went overseas.

“I find it extraordinary that you can’t answer that. I’ll have to ask you all to appear again,” senator Nick Xenophon said.

“I’ll take in on notice,” King said.

“We book all of our revenues to do with Australian sales here in our books in Apple Australia,” King said.

“We purchase our products on an arms-length basis from affiliates, we book all the costs in Apple Australia’s books, we declare all of our income in accordance with Australian tax law, and we pay all taxes that we owe.

The company reportedly shifted $9 billion in Australia profits to its Irish parent in the 10 years prior to 2013, thanks to a pattern of increasing mark-ups on products sold to Apple Australia via its Irish parent company.

King denied suggestions Apple was inflating the transfer price of goods to a point where it could lower gross profit to minimise taxable income.

You are entitled to minimise your tax liabilities through investment activities and to receive the benefits provided for under the law.

Tax minimisation is when you legitimately arrange your tax affairs to reduce the amount of tax you pay. These arrangements comply with both the letter and spirit of the law.

However, investment schemes and legal structures that do not comply with the law are considered to be aggressive tax planning arrangements – referred to as tax schemes.

A tax scheme is an artificial or contrived arrangement to avoid or defer tax obligations. Schemes often involve a series of complex transactions. They typically move funds through several entities, such as trusts, in order to avoid or minimise tax otherwise payable.

Schemes may also involve distorting the way funds are being used to enable a taxpayer to claim deductions they are not entitled to.

Google, Microsoft come clean on tax structures

During almost two hours of grilling by senators, Google Australia managing director Maile Carnegie and Microsoft vice president of worldwide tax Bill Sample revealed most of their Australian revenue was booked by an affiliate business in Singapore.

Google’s Australian tax structure revealed the local organisation provides sales and marketing services to Google Singapore, for which it receives revenue. It also provides research and development for Google globally.

Google pays tax on its local R&D, sales and marketing activities in Australia, while its direct market revenue is booked – and therefore taxed – in Singapore.

Singapore has a corporate tax rate of 17 percent, compared with Australia’s 30 percent.

Microsoft’s Bill Sample revealed the software giant had a similar set-up in Singapore.

“The products and services we sell to Australian customers are sold by the Singapore group, and the sales people are primarily located in Singapore,” Sample said.

“Microsoft’s consulting services are billed and accounted for on Australian books, non-consulting services and product revenue is billed and accounted for on our Singapore group books.”

For fiscal 2014, Sample said, Microsoft’s Australian product and customer service revenue was around $2 billion, which was booked and taxed in Singapore. Around $100 million of consulting services revenue was booked and taxed in Australia, he said.

Aluminium phone battery can be charged in a minute

researchers, who detailed their discovery in the journal Nature, said the new aluminium-ion battery has the potential to replace lithium-ion batteries, used in millions of laptops and mobile phones.

Besides recharging much faster, the new aluminium battery is safer than existing lithium-ion batteries, which occasionally burst into flames,

A team lead by chemistry professor Hongjie Dai at Stanford University in California made a breakthrough by accidentally discovering that graphite made a good partner to aluminium, Stanford said in a statement.

In a prototype, aluminium was used to make the negatively-charged anode while graphite provided material for the positively charged cathode.

A prototype aluminium battery recharged in one minute, the scientists said.

While lithium-ion batteries last about 1,000 cycles, the new aluminium battery was able to continue after more than 7,500 cycles without loss of capacity. It also can be bent or folded.

Larger aluminium batteries could also be used to store renewable energy on the electrical grid, Dai said.

Illegal downloading: Australia internet firms must supply data

In a landmark move, the Federal Court told six firms to divulge names and addresses of those who downloaded The Dallas Buyers Club.

The case was lodged by the US company that owns the rights to the 2013 movie.

The court said the data could only be used to secure “compensation for the infringements” of copyright.

In the case, which was heard in February, the applicants said they had identified 4,726 unique IP addresses from which their film was shared online using BitTorrent, a peer-to-peer file sharing network. They said this had been done without their permission.

Once they received the names of account holders, the company would then have to prove copyright infringement had taken place.


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