Canon Australia Pty Ltd’s annual financial statements lodged with ASIC indicate that it has only paid income tax once in the last three years, making a total profit over the period of around $40 million, with $6 million of this being an ‘income tax benefit’.
Following recent scrutiny in the business and general media of tax contributions by multinational corporations doing business in Australia, it appears that Canon can be included in the ranks of companies that pay considerably less than the Australian company tax rate of 30 cents in the dollar.
The issue becomes more relevant to the photo industry now that Canon competes aggressively as a retailer of photographic goods. It also operates at a retail level via its ownership of Sun Studios and in photo printing services via its PhotoPico business. Being able to minimise tax payments delivers Canon’s retail businesses an added advantage beyond sourcing its products at landed cost, and economies of scale. Most competing businesses, many of which are ‘mum and dad’ operations, would not have the accountancy resources to minimise company tax below the Australian rate of 30 cents in the dollar.
Two of Canon’s largest retail competitors in photographic equipment, Ted’s Cameras and Raleru (Camera House), have paid income tax at a rate of around 30 cents in the dollar on their profit-before-tax figures for the last three years, according to annual reports lodged with ASIC.
By comparison, in 2011, Canon Australia Pty Ltd had a $5.8 million income tax benefit on a loss of $9.3 million, resulting in a net loss of $3.5 million. Total revenue in 2011 was $731.7 million.
In 2012 there was an income tax benefit of just over $1 million on a profit of $38.6 million, resulting in a net profit of $39.6 million. Total revenue in 2012 was $722.2 million.
In 2013 Canon Australia paid $561,000 tax on a profit of $4.1 million, resulting in a net profit after tax of $3.6 million. Total revenue was $670.1 million (although this was marred by a reduction in ‘dividend income’ of over $30 million – revenue from sale of goods only slipped around $17 million).
So overall, from 2011 – 2013, Canon made a total of $39.7 million after-tax profit, with $6.2 million of this being ‘Income tax benefit’. This was on total revenue of $2.12 billion.
These figures relate to Canon Australia specifically, Canon also lodges consolidated accounts comprising other entities such as Canon NZ, Canon Finance and Oce.
Invited to comment on its tax payments, Canon Australia replied via its PR consultancy, Ogilvy PR: ‘This is a matter of standard Australian accounting. All the information is disclosed in our reports to ASIC.’
The assumption might be that ‘all the big guys do it’. However this is not the case. Fujifilm Holdings Australia, another large multinational player in the photo industry appears to contribute income tax at around the normal rate. In 2011 (to March 31), its profit before tax was $14.1 million, from which it paid $3.5 million in income tax. In 2012 profit before tax was $4.3 million and it paid $1.1 million. Last year it made a loss of $2.9 million, with a tax benefit of $833,000.