1 00:00:01,200 --> 00:00:03,520 Speaker 1: My name is Lily Maddon and I'm a proud Arunda 2 00:00:03,760 --> 00:00:08,520 Speaker 1: Bungelung Calcottin woman from Gadighl Country. The Daily oz acknowledges 3 00:00:08,600 --> 00:00:10,760 Speaker 1: that this podcast is recorded on the lands of the 4 00:00:10,800 --> 00:00:14,360 Speaker 1: Gadighl people and pays respect to all Aboriginal and Torres 5 00:00:14,400 --> 00:00:17,279 Speaker 1: Strait Island and nations. We pay our respects to the 6 00:00:17,320 --> 00:00:20,079 Speaker 1: first peoples of these countries, both past and present. 7 00:00:25,160 --> 00:00:28,600 Speaker 2: Good morning and welcome to the Daily os. It is Thursday, 8 00:00:28,680 --> 00:00:32,040 Speaker 2: the sixteenth of November. How are we already here? I 9 00:00:32,240 --> 00:00:34,120 Speaker 2: am believe it, Simon's. 10 00:00:33,760 --> 00:00:37,360 Speaker 3: I am Emma Gillespie equally confused about the mid November 11 00:00:37,479 --> 00:00:38,160 Speaker 3: state of things. 12 00:00:38,440 --> 00:00:43,480 Speaker 2: Okay, I'm going to list a number of companies. Crown Casino, AGL, 13 00:00:43,800 --> 00:00:49,000 Speaker 2: Quantis Energy Australia, Virgin the Star. Emma, what do all 14 00:00:49,040 --> 00:00:50,880 Speaker 2: of these companies have in common? 15 00:00:51,080 --> 00:00:55,520 Speaker 3: In my mind, these companies are very big. 16 00:00:55,840 --> 00:00:59,360 Speaker 2: Very big Australian companies, and they also have another thing 17 00:00:59,400 --> 00:01:03,480 Speaker 2: in common. They paid zero dollars in company tax in 18 00:01:03,520 --> 00:01:07,280 Speaker 2: the twenty twenty one twenty twenty two financial year. So 19 00:01:07,360 --> 00:01:10,280 Speaker 2: why did these companies pay no tax? We are going 20 00:01:10,319 --> 00:01:12,319 Speaker 2: to let you know in the deep dive. But first, 21 00:01:12,400 --> 00:01:14,480 Speaker 2: Emma some news about cybercrime today. 22 00:01:14,640 --> 00:01:18,200 Speaker 3: Cybercrime in Australia has risen twenty three percent in the 23 00:01:18,280 --> 00:01:22,200 Speaker 3: last year. According to a new cybersecurity report. The Australian 24 00:01:22,319 --> 00:01:26,360 Speaker 3: Signals Directorate said cybercrime is costing small business victims an 25 00:01:26,400 --> 00:01:30,639 Speaker 3: average of forty six thousand dollars per year. Nearly ninety 26 00:01:30,680 --> 00:01:33,840 Speaker 3: four thousand reports were made to law enforcement over the 27 00:01:33,840 --> 00:01:37,120 Speaker 3: twenty twenty two to twenty three financial year. That's around 28 00:01:37,280 --> 00:01:41,600 Speaker 3: one every six minutes. The report also found ransomware made 29 00:01:41,680 --> 00:01:45,160 Speaker 3: up about ten percent of all cyber incidents, and that's 30 00:01:45,200 --> 00:01:47,920 Speaker 3: when a hacker encrypt your files so you can no 31 00:01:48,000 --> 00:01:51,240 Speaker 3: longer access them and typically asks for payment. 32 00:01:52,200 --> 00:01:56,000 Speaker 2: Australia's energy operator says it is bracing for the possibility 33 00:01:56,080 --> 00:01:58,920 Speaker 2: of extreme demand on the power grid ahead of summer. 34 00:01:59,560 --> 00:02:03,200 Speaker 2: In its a readiness overview that AMOS said due to 35 00:02:03,240 --> 00:02:06,280 Speaker 2: the forecasted hot and dry El Nino weather, there are 36 00:02:06,320 --> 00:02:09,320 Speaker 2: growing concerns that bushfires and extreme heat will put a 37 00:02:09,320 --> 00:02:13,720 Speaker 2: strain on electricity demands. However, an increase in renewables is 38 00:02:13,760 --> 00:02:17,960 Speaker 2: expected to somewhat lessen the potential of blackouts as summer approaches. 39 00:02:19,200 --> 00:02:23,040 Speaker 3: An electric air taxi has taken off in New York City. 40 00:02:23,280 --> 00:02:26,160 Speaker 3: It's the first time any service of its kind has 41 00:02:26,200 --> 00:02:30,239 Speaker 3: flown in an urban setting. The new vertical takeoff and 42 00:02:30,320 --> 00:02:34,399 Speaker 3: landing aircraft can seat four passengers and a driver, fly 43 00:02:34,560 --> 00:02:37,560 Speaker 3: one hundred and sixty kilometers on one charge, and is 44 00:02:37,680 --> 00:02:42,160 Speaker 3: more sustainable and quiet to operate than helicopters. It's expected 45 00:02:42,200 --> 00:02:45,720 Speaker 3: to become available to public passengers in twenty twenty. 46 00:02:45,440 --> 00:02:49,680 Speaker 2: Five and today's good news, although we can debate whether 47 00:02:49,720 --> 00:02:53,600 Speaker 2: this is actually good news. Almost fifty new spider species 48 00:02:53,680 --> 00:02:56,960 Speaker 2: have been discovered in Australia thanks to a recent project 49 00:02:57,080 --> 00:03:00,600 Speaker 2: by researchers with the University of Southern Queensland, and it 50 00:03:00,680 --> 00:03:03,560 Speaker 2: is estimated there could be as many as fifteen thousand 51 00:03:03,639 --> 00:03:07,440 Speaker 2: spieder species across the country, but only three thousand have 52 00:03:07,480 --> 00:03:11,279 Speaker 2: been identified so far. As for these forty eight new discoveries, 53 00:03:11,600 --> 00:03:14,800 Speaker 2: some will be named after scientists and notable figures, including 54 00:03:14,840 --> 00:03:19,079 Speaker 2: the former Totally Wild presenter ranger Stacy Thompson. I've never 55 00:03:19,080 --> 00:03:21,800 Speaker 2: heard of her, totally wild, never heard of it. 56 00:03:21,840 --> 00:03:23,000 Speaker 3: Totally Wild. 57 00:03:23,200 --> 00:03:25,720 Speaker 2: Great intro song, generational gap. 58 00:03:26,000 --> 00:03:34,000 Speaker 3: Okay I am three years older than you. Okay, Billy, 59 00:03:34,080 --> 00:03:37,880 Speaker 3: Today we are talking about tax but I've got to say, 60 00:03:38,000 --> 00:03:40,640 Speaker 3: this one is a little bit more interesting than maybe 61 00:03:40,680 --> 00:03:45,320 Speaker 3: our usual approach to tax discussions because specifically we're talking 62 00:03:45,320 --> 00:03:49,080 Speaker 3: about the amount of tax paid by some of Australia's 63 00:03:49,200 --> 00:03:50,200 Speaker 3: largest companies. 64 00:03:50,520 --> 00:03:53,240 Speaker 2: That's right, So at least for more than eight hundred 65 00:03:53,720 --> 00:03:56,720 Speaker 2: of our largest companies in the twenty twenty one twenty 66 00:03:56,800 --> 00:04:00,000 Speaker 2: twenty two financial year. Note that is not the life 67 00:04:00,480 --> 00:04:04,320 Speaker 2: financial year, it's the one prior to that paid no 68 00:04:04,640 --> 00:04:08,120 Speaker 2: company tax. According to data published by the Australian Tax 69 00:04:08,160 --> 00:04:09,600 Speaker 2: Offers this week. 70 00:04:09,560 --> 00:04:14,320 Speaker 3: Eight hundred companies that paid zero dollars in tax in 71 00:04:14,360 --> 00:04:17,240 Speaker 3: the twenty twenty one to twenty two financial year. Nothing. 72 00:04:17,600 --> 00:04:21,560 Speaker 2: Yes, I should clarify company tax. So zero dollars in 73 00:04:21,839 --> 00:04:25,960 Speaker 2: company tax. The list of companies includes a fair few 74 00:04:26,240 --> 00:04:31,280 Speaker 2: household names, so we have Quantus and Virgin ADL Energy Australia, 75 00:04:31,960 --> 00:04:37,800 Speaker 2: even Crown and Star Entertainment, so massive companies. There's even Sintel, 76 00:04:37,800 --> 00:04:40,919 Speaker 2: which is the owner of everybody's favorite company right now optists. 77 00:04:41,600 --> 00:04:44,440 Speaker 2: But here's the thing that's important to say. At the 78 00:04:44,480 --> 00:04:47,599 Speaker 2: outset of this discussion, there is no suggestion that we 79 00:04:47,640 --> 00:04:51,600 Speaker 2: are making that any company that I've listed has acted illegally. 80 00:04:52,040 --> 00:04:55,680 Speaker 2: So this result that more than eight hundred large companies 81 00:04:55,760 --> 00:04:59,040 Speaker 2: have paid zero dollars in company tax. Is actually the 82 00:04:59,080 --> 00:05:03,000 Speaker 2: result of the way our tax system is set up. 83 00:05:03,520 --> 00:05:06,800 Speaker 2: And what I want to explore today is why that 84 00:05:07,040 --> 00:05:09,240 Speaker 2: is the case, because I think it's really interesting and 85 00:05:09,279 --> 00:05:10,760 Speaker 2: not something that we think about often. 86 00:05:11,080 --> 00:05:14,880 Speaker 3: Yeah, when I saw this story, I immediately assumed that 87 00:05:14,920 --> 00:05:17,839 Speaker 3: these companies must have done something dodgy, But as you said, 88 00:05:18,120 --> 00:05:22,200 Speaker 3: they have acted legally. So let's start by explaining the 89 00:05:22,360 --> 00:05:25,320 Speaker 3: system of company tax, Billy. How does it work? 90 00:05:25,520 --> 00:05:28,640 Speaker 2: So I will start with the numbers. Now, if you're 91 00:05:28,800 --> 00:05:32,000 Speaker 2: a business with an annual turnover of more than fifty 92 00:05:32,080 --> 00:05:36,799 Speaker 2: million dollars in Australia, your tax rate is thirty percent, 93 00:05:37,640 --> 00:05:41,320 Speaker 2: and if you're a smaller business it's twenty five percent. 94 00:05:41,920 --> 00:05:45,280 Speaker 2: But I think the key question is thirty percent or 95 00:05:45,320 --> 00:05:49,320 Speaker 2: twenty five percent of what exactly? And the answer to 96 00:05:49,360 --> 00:05:53,000 Speaker 2: that is that companies in Australia are taxed not on 97 00:05:53,040 --> 00:05:56,240 Speaker 2: what they earn, but on their profit. So that is 98 00:05:56,520 --> 00:06:00,280 Speaker 2: the earnings minus expenses, taking you right back to year 99 00:06:00,279 --> 00:06:04,080 Speaker 2: ten economics there, and that's the key reason that so 100 00:06:04,240 --> 00:06:07,880 Speaker 2: many companies will pay no tax in a given year. 101 00:06:08,320 --> 00:06:11,000 Speaker 2: So if they make no profit, so that means that 102 00:06:11,080 --> 00:06:13,880 Speaker 2: if they operate at a loss, then they are paying 103 00:06:14,080 --> 00:06:15,560 Speaker 2: no company tax. 104 00:06:16,560 --> 00:06:18,600 Speaker 3: What is the reason for that. 105 00:06:18,920 --> 00:06:23,240 Speaker 2: Well, the basic idea is that it doesn't discourage businesses 106 00:06:23,360 --> 00:06:27,320 Speaker 2: from operating. If you imagine a business that's maybe just 107 00:06:27,440 --> 00:06:32,880 Speaker 2: breaking even making a tiny, tiny profit, if that business cops, 108 00:06:33,000 --> 00:06:36,960 Speaker 2: say a thirty percent tax on its entire earnings, then 109 00:06:37,000 --> 00:06:41,760 Speaker 2: that profit disappears and the business loses money, and that 110 00:06:41,880 --> 00:06:47,400 Speaker 2: could discourage you from operating in Australia. If that business cops, 111 00:06:47,480 --> 00:06:51,320 Speaker 2: say a thirty percent tax on its entire earnings, then 112 00:06:51,400 --> 00:06:56,000 Speaker 2: that profit disappears and the business will lose money, and 113 00:06:56,040 --> 00:06:58,320 Speaker 2: you might end up in a situation where a business 114 00:06:58,520 --> 00:07:03,360 Speaker 2: is tipped into closing specifically because of the tax, and 115 00:07:03,400 --> 00:07:08,520 Speaker 2: that's not something the government wants. Whereas, if you're taxing profits, 116 00:07:08,920 --> 00:07:12,480 Speaker 2: sure you're eating into the profit margin of a business, 117 00:07:12,920 --> 00:07:15,880 Speaker 2: but they're still going to make a profit. So tax 118 00:07:15,960 --> 00:07:19,320 Speaker 2: is never going to be pushing a business into the red. 119 00:07:19,960 --> 00:07:23,320 Speaker 2: And that's an approach that is followed in most comparable countries. 120 00:07:23,560 --> 00:07:26,480 Speaker 3: Okay, so now we understand that aspect of it. Let's 121 00:07:26,520 --> 00:07:29,080 Speaker 3: go back to those eight hundred companies. Then some of 122 00:07:29,120 --> 00:07:31,640 Speaker 3: the big ones that you listed for US earlier, Billy 123 00:07:32,320 --> 00:07:36,920 Speaker 3: Energy Australia, Quantus Virgin Do we then conclude that those 124 00:07:37,000 --> 00:07:39,640 Speaker 3: companies are all operating at a loss. 125 00:07:40,040 --> 00:07:42,960 Speaker 2: So some definitely would be operating at a loss, but 126 00:07:43,120 --> 00:07:47,240 Speaker 2: not necessarily all. So stay with me. It's important to 127 00:07:47,240 --> 00:07:51,000 Speaker 2: say here that making a loss doesn't mean a business 128 00:07:51,120 --> 00:07:54,280 Speaker 2: is failing. That's a really important distinction to make. If 129 00:07:54,280 --> 00:07:57,320 Speaker 2: a business is making losses year after year after year, 130 00:07:57,720 --> 00:08:02,120 Speaker 2: then probably at some point they are failing. But businesses 131 00:08:02,240 --> 00:08:06,320 Speaker 2: will often operate at a loss in specific years for 132 00:08:06,400 --> 00:08:09,360 Speaker 2: good reasons. For example, they might be expanding their business 133 00:08:09,400 --> 00:08:12,400 Speaker 2: and planning to make profits in a future year. That 134 00:08:12,520 --> 00:08:14,800 Speaker 2: kind of classic saying, you have to spend money to 135 00:08:14,840 --> 00:08:17,760 Speaker 2: make money. Now a great example here is Quantus. Now 136 00:08:17,800 --> 00:08:20,000 Speaker 2: you might be a little bit confused because we have 137 00:08:20,120 --> 00:08:23,920 Speaker 2: reported on this podcast that Quantus posted a big profit 138 00:08:24,080 --> 00:08:27,760 Speaker 2: this year quite controversially so, but the year before that 139 00:08:28,440 --> 00:08:29,920 Speaker 2: it did make a loss. 140 00:08:30,120 --> 00:08:33,240 Speaker 3: Yeah. I did think that when I saw Quantus included 141 00:08:33,320 --> 00:08:36,280 Speaker 3: in this list. So we're talking about the tax figure 142 00:08:36,320 --> 00:08:39,520 Speaker 3: from twenty twenty one to twenty two, which am I 143 00:08:39,559 --> 00:08:41,959 Speaker 3: right in saying Billy Quantus would have been impacted then 144 00:08:42,280 --> 00:08:43,320 Speaker 3: by the pandemic. 145 00:08:43,559 --> 00:08:46,319 Speaker 2: Yeah, so if you think about that period, there were 146 00:08:46,360 --> 00:08:49,959 Speaker 2: still a lot of COVID disruptions, you might have blocked 147 00:08:49,960 --> 00:08:51,800 Speaker 2: it out fair enough. I feel like I have as well. 148 00:08:52,040 --> 00:08:55,559 Speaker 2: But this was the period when we had staff shortages 149 00:08:55,720 --> 00:08:59,720 Speaker 2: at airports due to COVID isolation. People still weren't flying 150 00:08:59,720 --> 00:09:05,000 Speaker 2: as much, so that definitely hurt Quantus's profitability. But another 151 00:09:05,040 --> 00:09:08,880 Speaker 2: reason for this is that Quantus placed the largest aircraft 152 00:09:09,040 --> 00:09:12,160 Speaker 2: order in its history for a bunch of new planes. 153 00:09:12,200 --> 00:09:16,000 Speaker 2: And remember we said profit was your earnings minus your expenses, 154 00:09:16,280 --> 00:09:19,280 Speaker 2: so that really took a large chunk of the expenses. 155 00:09:20,000 --> 00:09:22,800 Speaker 2: But now fast forward to the most recent financial year, 156 00:09:23,280 --> 00:09:27,680 Speaker 2: and with a rebound in travel, Quantus is definitely looking 157 00:09:27,960 --> 00:09:31,800 Speaker 2: okay in terms of profitability. And it's making so much 158 00:09:31,800 --> 00:09:35,240 Speaker 2: profit actually that it made some people quite angry, especially our. 159 00:09:35,080 --> 00:09:37,240 Speaker 3: Audience, I was going to say, certainly in the comments 160 00:09:37,280 --> 00:09:38,920 Speaker 3: actually on the Daily Ons Instagram. 161 00:09:39,440 --> 00:09:43,000 Speaker 2: So Quantus isn't a failing company by any measure. But 162 00:09:43,040 --> 00:09:45,040 Speaker 2: in twenty twenty one to twenty twenty two, in that 163 00:09:45,080 --> 00:09:48,120 Speaker 2: financial year, it did make a loss and so it 164 00:09:48,160 --> 00:09:49,040 Speaker 2: paid no tax. 165 00:09:49,440 --> 00:09:52,040 Speaker 3: So now that Quantus has made a profit in the 166 00:09:52,080 --> 00:09:55,920 Speaker 3: most recent financial year, are we expecting that it will 167 00:09:55,960 --> 00:09:57,160 Speaker 3: start paying tax again. 168 00:09:57,559 --> 00:10:01,880 Speaker 2: Okay, great question, and the answer is not necessarily. I 169 00:10:01,920 --> 00:10:05,120 Speaker 2: will explain why. So here's where our story gets a 170 00:10:05,200 --> 00:10:10,000 Speaker 2: little more complicated, because there is another detail to company 171 00:10:10,160 --> 00:10:13,760 Speaker 2: tax rules which I have been honestly holding back until 172 00:10:13,760 --> 00:10:14,960 Speaker 2: now to ease you into it. 173 00:10:15,040 --> 00:10:18,160 Speaker 3: I feel like the amount that I've complained about how 174 00:10:18,280 --> 00:10:21,040 Speaker 3: much I didn't like business studies in high school has 175 00:10:21,120 --> 00:10:23,920 Speaker 3: really intimidated in that situation. 176 00:10:23,640 --> 00:10:26,560 Speaker 2: Because I want you it's really interesting and it's important 177 00:10:26,600 --> 00:10:28,560 Speaker 2: to understand. So what I want to explain here is 178 00:10:28,559 --> 00:10:34,280 Speaker 2: that Australia and most comparable countries allow companies to carry 179 00:10:34,360 --> 00:10:38,480 Speaker 2: forward their losses into future years. So let me explain 180 00:10:38,480 --> 00:10:41,480 Speaker 2: that if you make a massive loss in one year, 181 00:10:42,040 --> 00:10:45,840 Speaker 2: you can spread that out effectively however you like in 182 00:10:45,960 --> 00:10:46,680 Speaker 2: future years. 183 00:10:46,720 --> 00:10:49,000 Speaker 3: So to recap, I just want to make sure I'm 184 00:10:49,080 --> 00:10:56,440 Speaker 3: understanding this. Companies can predict maybe losses and sort of 185 00:10:56,800 --> 00:10:58,760 Speaker 3: navigate tax around that. 186 00:10:59,360 --> 00:11:04,359 Speaker 2: Not necessary predict, but just move it around. Creative accounting, 187 00:11:04,400 --> 00:11:06,600 Speaker 2: I think, is what they like to call it, and 188 00:11:06,640 --> 00:11:11,120 Speaker 2: the idea is that it gives companies more flexibility. A 189 00:11:11,160 --> 00:11:15,120 Speaker 2: big loss in one year can basically allow you to 190 00:11:15,200 --> 00:11:19,440 Speaker 2: reduce your tax to zero for several years, and there 191 00:11:19,440 --> 00:11:22,040 Speaker 2: are some other of what you might call loopholes. 192 00:11:22,280 --> 00:11:22,439 Speaker 3: Two. 193 00:11:22,600 --> 00:11:26,600 Speaker 2: So, just like on personal tax returns, businesses can claim 194 00:11:26,720 --> 00:11:31,400 Speaker 2: deductions which reduce their tax bill for certain items. A 195 00:11:31,440 --> 00:11:34,079 Speaker 2: well known one is if you spend on research and development, 196 00:11:34,320 --> 00:11:37,840 Speaker 2: you can then claim that on your tax. And interestingly, 197 00:11:37,880 --> 00:11:41,920 Speaker 2: actually in COVID there was a temporary policy which let 198 00:11:42,000 --> 00:11:46,079 Speaker 2: businesses not just carry forward losses, but actually carry them 199 00:11:46,120 --> 00:11:49,439 Speaker 2: back and get a refund on tax they had already 200 00:11:49,520 --> 00:11:53,720 Speaker 2: paid in previous years. So you know, there are lots 201 00:11:53,760 --> 00:11:57,520 Speaker 2: of these rules that allow companies to structure their affairs 202 00:11:57,920 --> 00:12:01,080 Speaker 2: in such a way that they pay little or no 203 00:12:01,280 --> 00:12:04,880 Speaker 2: tax for many years. And we do see this. We 204 00:12:04,920 --> 00:12:08,080 Speaker 2: have data going back to twenty thirteen and twenty fourteen, 205 00:12:08,480 --> 00:12:11,240 Speaker 2: and we can see there are some companies that have 206 00:12:11,679 --> 00:12:14,400 Speaker 2: literally paid no tax in that whole time. 207 00:12:14,559 --> 00:12:18,040 Speaker 3: Philly, I have to ask you, and it's the person 208 00:12:18,080 --> 00:12:21,520 Speaker 3: in me holding out for a true crime angle here. 209 00:12:21,840 --> 00:12:26,320 Speaker 3: But is that controversial? If a person wasn't paying any 210 00:12:26,360 --> 00:12:29,680 Speaker 3: tax for all those years, I think they would surely 211 00:12:29,720 --> 00:12:32,760 Speaker 3: be audited. Are these businesses in any trouble? 212 00:12:33,200 --> 00:12:35,880 Speaker 2: Yeah, it's very controversial. We did mention the Dally Oz 213 00:12:35,960 --> 00:12:38,240 Speaker 2: comment section you just have to look at those to 214 00:12:38,320 --> 00:12:41,680 Speaker 2: know that it's controversial. So there is debate all over 215 00:12:41,720 --> 00:12:44,360 Speaker 2: the world, not just in the dally OS's comment sections, 216 00:12:44,760 --> 00:12:49,280 Speaker 2: about whether company tax makes it too easy for businesses 217 00:12:49,320 --> 00:12:53,560 Speaker 2: to pay very little tax. So the International Monetary Fund, 218 00:12:53,600 --> 00:12:56,360 Speaker 2: we've talked about them before on the podcast. They are 219 00:12:56,760 --> 00:13:02,200 Speaker 2: an international institution focused on economic growth and stability. So 220 00:13:02,280 --> 00:13:06,240 Speaker 2: they recommend a minimum tax on earnings, so just a 221 00:13:06,280 --> 00:13:09,760 Speaker 2: small amount that even companies that don't record a profit 222 00:13:10,200 --> 00:13:13,839 Speaker 2: have to pay something. And in particular, there is a 223 00:13:13,880 --> 00:13:18,280 Speaker 2: fierce global debate about multinational companies. So if you think 224 00:13:18,320 --> 00:13:22,760 Speaker 2: of you know, the global mega companies like Google, Apple, Microsoft, 225 00:13:23,280 --> 00:13:26,600 Speaker 2: those companies don't just get to play around with the 226 00:13:26,720 --> 00:13:30,320 Speaker 2: rules in tax systems in single countries like Australia, but 227 00:13:30,400 --> 00:13:34,160 Speaker 2: they get to play countries off against each other. So 228 00:13:34,320 --> 00:13:36,920 Speaker 2: that's where you know, you get the places like the 229 00:13:36,960 --> 00:13:40,480 Speaker 2: Cayman Islands and the Bahamas. You know famously they have 230 00:13:40,640 --> 00:13:44,760 Speaker 2: zero percent corporate tax, even on profits, and that's the 231 00:13:44,800 --> 00:13:49,320 Speaker 2: same with the UAE. Interestingly, also Ireland and Singapore have 232 00:13:49,559 --> 00:13:51,360 Speaker 2: very low tax rates. 233 00:13:51,440 --> 00:13:55,720 Speaker 3: So if you're a big multinational, you are earning money 234 00:13:55,880 --> 00:13:58,920 Speaker 3: and spending money as a business in lots of different countries. 235 00:13:59,040 --> 00:14:04,319 Speaker 3: You can basic game the system in terms of individual 236 00:14:04,400 --> 00:14:06,080 Speaker 3: countries tax laws. 237 00:14:06,520 --> 00:14:10,160 Speaker 2: Yeah, exactly. So if you are a big multinational so 238 00:14:10,200 --> 00:14:12,920 Speaker 2: like we said before at Google and Apple, and you 239 00:14:13,040 --> 00:14:16,679 Speaker 2: choose to have your official headquarters in one of these places, 240 00:14:17,280 --> 00:14:20,200 Speaker 2: then you can essentially gain the system to make earnings 241 00:14:20,240 --> 00:14:24,680 Speaker 2: that are actually from Australia to be officially registered in 242 00:14:24,760 --> 00:14:28,120 Speaker 2: one of those countries, and then you reduce your tax 243 00:14:28,160 --> 00:14:32,760 Speaker 2: bill even further. And as we said, it is controversial. 244 00:14:32,840 --> 00:14:35,600 Speaker 2: You know, this is something that there are global efforts 245 00:14:35,640 --> 00:14:38,480 Speaker 2: to crack down on. There are so many different perspectives, 246 00:14:38,560 --> 00:14:41,520 Speaker 2: like we said the one from the International Monetary Fund before, 247 00:14:42,120 --> 00:14:45,400 Speaker 2: and it's something that Australian governments from both sides of 248 00:14:45,480 --> 00:14:47,880 Speaker 2: politics have tried to change. 249 00:14:48,000 --> 00:14:54,040 Speaker 3: So Australian politicians, governments, global funds, the international finance community 250 00:14:54,440 --> 00:14:56,720 Speaker 3: is aware they want to change it. 251 00:14:57,440 --> 00:15:00,360 Speaker 2: But how that is the billion dollar question, as they 252 00:15:00,400 --> 00:15:03,160 Speaker 2: say in this case, literally billion dollar. 253 00:15:02,920 --> 00:15:04,800 Speaker 3: Question, billions of dollars. 254 00:15:05,120 --> 00:15:08,920 Speaker 2: So you may remember that the PwC scandal earlier this 255 00:15:09,040 --> 00:15:13,080 Speaker 2: year was all about the government engaging the firm to 256 00:15:13,160 --> 00:15:16,480 Speaker 2: advise them on ways to make the tax system more 257 00:15:16,840 --> 00:15:19,880 Speaker 2: watertight and to kind of close some of these loopholes. 258 00:15:19,960 --> 00:15:25,480 Speaker 3: But ironically, of course PwC was simultaneously finding ways around 259 00:15:25,600 --> 00:15:30,400 Speaker 3: government policy to crack down on multinational tax avoidance. Exactly, 260 00:15:30,440 --> 00:15:33,040 Speaker 3: and we did do a deep dive on this topic. 261 00:15:33,200 --> 00:15:34,640 Speaker 3: We'll pop a link in the show notes. 262 00:15:35,000 --> 00:15:38,400 Speaker 2: Yeah, exactly. So it's really tricky because for countries like 263 00:15:38,520 --> 00:15:42,720 Speaker 2: Ireland or Singapore or the UAE, they make a lot 264 00:15:42,760 --> 00:15:47,680 Speaker 2: of money out of making themselves really attractive tax destinations. 265 00:15:48,280 --> 00:15:52,240 Speaker 2: You know, Ireland has made itself basically the gateway to Europe. 266 00:15:52,280 --> 00:15:56,040 Speaker 2: Singapore is known as the gateway to Asia. And there's 267 00:15:56,120 --> 00:15:58,840 Speaker 2: probably always going to be a chink in the armor, 268 00:15:58,880 --> 00:16:01,480 Speaker 2: as they say, somewhere in the world. And in fact, 269 00:16:01,560 --> 00:16:05,640 Speaker 2: that argument sometimes gets made for why Australia should lower 270 00:16:05,640 --> 00:16:09,520 Speaker 2: its corporate tax rate. So thirty percent, as we mentioned 271 00:16:09,560 --> 00:16:12,640 Speaker 2: for those really large companies, that is one of the 272 00:16:12,840 --> 00:16:16,000 Speaker 2: highest in the world. So the US has twenty one 273 00:16:16,040 --> 00:16:19,560 Speaker 2: percent and the UK has nineteen percent, So Australia's thirty 274 00:16:19,560 --> 00:16:23,160 Speaker 2: percent is really quite high. And some argue that the 275 00:16:23,280 --> 00:16:27,840 Speaker 2: high rate encourages companies to structure their affairs in a 276 00:16:27,880 --> 00:16:32,240 Speaker 2: way to actually avoid that high tax rate. But if 277 00:16:32,280 --> 00:16:35,120 Speaker 2: you follow that logic, you could end up with, you know, 278 00:16:35,200 --> 00:16:38,360 Speaker 2: a race to the bottom where countries are all charging 279 00:16:38,680 --> 00:16:42,960 Speaker 2: very little company tax. It's clearly something that you know, 280 00:16:43,080 --> 00:16:46,720 Speaker 2: gets a reaction out of people, but solving the issue 281 00:16:47,160 --> 00:16:49,520 Speaker 2: is a really thorny one for governments for sure. 282 00:16:49,760 --> 00:16:53,120 Speaker 3: Billy, thank you so much. I am not jealous of 283 00:16:53,160 --> 00:16:58,040 Speaker 3: anyone trying to figure out how to regulate this situation better. 284 00:16:58,600 --> 00:17:01,160 Speaker 3: But that's all we've got time today. Thank you for 285 00:17:01,240 --> 00:17:05,160 Speaker 3: joining us on the Daily OS, and thank you for listening. 286 00:17:05,800 --> 00:17:07,879 Speaker 3: No one here wants to mention this because they're all 287 00:17:08,000 --> 00:17:10,880 Speaker 3: very humble, but the Daily Os just had a record 288 00:17:10,960 --> 00:17:15,600 Speaker 3: breaking month of podcast listens. We had our biggest ever 289 00:17:16,160 --> 00:17:20,440 Speaker 3: number of listeners, and I just want to say well 290 00:17:20,480 --> 00:17:22,920 Speaker 3: deserved because I had very little to do with it. 291 00:17:23,280 --> 00:17:25,919 Speaker 3: So thank you so much for supporting this podcast. And 292 00:17:25,960 --> 00:17:29,000 Speaker 3: if you learn something from today's episode, send it to 293 00:17:29,040 --> 00:17:32,679 Speaker 3: your old business studies teacher. That way we'll get the 294 00:17:32,720 --> 00:17:35,920 Speaker 3: word out there and maybe have another record breaking month. Anyway, 295 00:17:36,080 --> 00:17:38,320 Speaker 3: we'll be back again tomorrow, but until then, have a 296 00:17:38,359 --> 00:17:42,880 Speaker 3: great day.