Canon Australia suffered an after-tax loss of $3.3 million in its 2015 financial year (Jan-Dec), on sales of $679 million.
This compares to an after-tax profit of $7.8 million on sales of $658 million in 2014.
Canon paid income tax of of $1.9 million in 2015, whereas in 2014 is claimed a tax benefit of $6.6 million.
Over the past five years (2011-2015), Canon Australia has had sales of around $3.5 billion, with total profits after tax of just $45 million – less than bank deposit rates of return! But almost $13 million of after-tax profits over those five years have actually been tax benefits from the ATO. Canon Australia has contributed income tax, rather than received a tax benefit, in only two of those five years; in 2013 it paid $561,000 on a profit of $4.1 million and in 2015 paid $1.9 million on the loss of $3.3 million, accruing franking credits in the process.
As we have noted previously, the issue of tax minimisation doesn’t just impact the Australian Treasury now that Canon competes as an online retailer of photographic goods. Canon also operates at a retail level in photo printing services via its PhotoPico business, where it competes against other photo services businesses. Sun Studios competes against professional resellers.
Being able to minimise tax payments delivers Canon’s retail businesses an added advantage beyond sourcing its products at landed cost, economies of scale and the harvesting of Canon authorised retailers’ customer contact details. 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.
It’s interesting to note that Canon’s accountancy fees have gone from $224,000 in 2013, to $452,000 in 2014 and this year came in just under $1 million.
Whoa! Everything’s heading south except Accountancy fees! Why is this so?
I fear for the (near) future if this situation is trending for many of the major camera brands.
I do enjoy a good accounting joke and these figures are one of them. The loss is only on paper and in no way reflects the actual profit generated by this and other companies operating with impunity in Australia. Links to Panama or perhaps Guersey? Does the account also do work for Apple, Google and eBay? Next they will be registering as a Not-for-profit Organization or even as a Religious Church.
Agree, Matt, that most multinationals’ country accounts tend to have a thick seam of BS running through them. The key figures here, I think, are total sales of $680 million and the Cost of Sales of $452 million. The Cost of Sales is pretty well what Canon Australia sends back to Canon in Tokyo for all the products they buy from them…That Admin Costs line of $162 mil against a Gross Profit of $227 mil is the kind of performance which would send a small business broke. Five times as much spent on Admin as Marketing!