For the first time since the ATO made corporate tax information public, Carlton and United Breweries’ owner has paid corporate tax, whilst Lion also upped its contribution rates.
The Australian Tax Office released its seventh annual Corporate Tax Transparency report last week for the 2019-2020 financial year, which revealed the corporate tax positions of Australia’s biggest companies.
For the past six years, according to the releases, neither of CUB’s previous owners, AB InBev or predecessor SAB Miller, paid corporate tax.
However, for the 2019-2020 year, CUB’s then-owner AB InBev paid corporate tax amounting to just over $113 million, accounting for 30 per cent of its taxable income.
The disclosures showed that ABI had returned a total income of $4.1 billion, down slightly on the $4.4 billion it made in the previous year of the report. Taxable income was calculated at $377 million.
Asahi Beverages officially took over CUB in June 2020 so for the purposes of the 2019 to 2020 financial year, CUB was operating under ABI Australia Financing, a subsidiary of Belgium’s AB InBev.
The news came as the ATO commended the improvement in tax compliance amongst big corporates, despite acknowledging that the proportion of companies that have paid no income tax remained steady for the year at 33 per cent.
“While the tax paid by this population may fluctuate year on year, the overall trend couldn’t be clearer. Corporates are placing a higher value on tax compliance, driving consistent and willing voluntary participation,” said ATO Deputy Commissioner Rebecca Saint.
It’s important to note that the ATO’s corporate tax transparency report has its issues and can not necessarily give a full picture of an entity’s tax contributions. Corporate tax is payable on taxable income, rather than total income or accounting profit, and there is a statutory company tax rate of 30 per cent.
It is also difficult to determine the tax situation of multinational corporations, and the ATO has acknowledged in the past that the annual report has its disadvantages.
“Multinational corporations’ tax compliance is complex due to the interplay of domestic and international rules and the nature of their business structures,” a spokesperson for the ATO said previously.
Companies can legitimately recoup tax losses made previously, pay less tax due to deductions or credits, or in some cases, engage in aggressive tax planning with group subsidiaries located in other countries.
However, the ATO asserted that the information provided “is sufficient to provide the community with high levels of confidence that the company is functionally fully compliant with Australia’s taxation system”.
Additionally, the Australian financial year starts on 1st July and ends the next year on 30th June, whereas some of the reporting entities, including Asahi (Holdings) Pty Ltd and Lion Pty Ltd, finish their year-end on 31st December, making ATO total income and company-reported revenue comparisons challenging.
Change of guard
Elsewhere, CUB’s new owner Asahi Beverages paid $29.4 million in corporate tax for the 2019-2020 tax year, which was 27.4 per cent of its total taxable income of $107.2 million. This indicates a tax rate of 27.4 per cent, much higher than any previous year for which the ATO has released data.
“It was a strong year for Asahi Beverages which reflects the high amount of tax payable,” a spokesperson for Asahi told Brews News.
According to the ATO’s figures, Asahi Holdings (Australia) Pty Ltd made $1.7 billion in total income for the 12-month accounting period.
Asahi Holdings’ own consolidated financial reports for the year to 31st December 2020 show that the company made $3.5 billion – taking into account the newly integrated CUB for the latter six months of the year – up from $2 billion the year before. It made profit before income tax of $212 million, nearly double the $115 million it made in 2019.
“It was another year filled with challenges, particularly for our on-prem customers in NSW and Victoria who faced extended lockdowns. However, pack beer sales continued to be strong,” the spokesperson continued.
During the year, CUB has ramped up production at Yatala and Abbotsford by an extra 100,000 kegs a month as lockdowns eased, which it said was “an important symbolic moment and a big morale boost after many challenging months”.
Strong numbers for Great Northern, VB’s national vaccination campaign, and the implementation of a sustainability agenda were also highlights.
“Our continued focus will be to build strong partnerships with our customers by doubling down on driving category growth.
“We’ll do this through partnering with our on-premise customers to encourage more people back into pubs, clubs and bars. We’re also investing in global trends like wellbeing and the explosion of craft beer to continue to drive growth with our retail partners.”
Excise, a cornerstone of Brewers Association policy, which counts Coopers, Lion and CUB amongst it members, continues to be a focal point for CUB.
“We’ll also make the case with the Australian Government that Australian beer drinkers deserve a break from beer taxes that keep going up twice a year.
“While the UK Government has just slashed its draught beer tax, the Australian Government in February will deliver one of the biggest increases in beer taxes in the last 10 years,” explained the spokesperson.
“Australia will soon have the 3rd highest beer tax in the developed world. It’s just not right. It’s making beer less affordable and putting a lot of pressure on an industry that’s already got enough challenges.”
Lion and Coopers
CUB rival Lion has also paid tax in the past year, amounting to $44.1 million, accounting for 28.9 per cent of its taxable income of $152.4 million.
As with Asahi and AB InBev, this was a much higher tax rate than Lion, a signatory of the Federal Government’s Voluntary Tax Transparency Reporting Scheme, has paid previously.
In the preceding seven years covered by the ATO’s report, Lion’s tax rate contributions were between 17 per cent and 26 per cent of its taxable income, save 2016-17 when it changed its year end and was reportedly not required to file ATO forms.
In 2018-19, the Kirin-owned brewer paid no corporate tax, because its $3 million tax bill for the year was offset relating to taxes already paid and its net tax payable was reduced to nil, according to the brewer.
The ATO’s figures suggest that Lion made $3.2 billion in total income in the 12 months covered by the report. Figures from Lion Pty’s financial statements disclosed to ASIC show that for the year to 27th December 2020, sales revenue reached $2 billion, a decline on the $2.4 billion made the previous year. Losses before tax amounted to $359.1 million.
In previous years, Coopers was the only brewery listed in the report that consistently paid tax close to statutory rates.
For the 2019-2020 year, the ATO disclosed that Coopers had paid just under $10 million in corporate tax, at a rate of 29.3 per cent. It said that Coopers made $282 million for the year, and had a taxable income of $34.1 million.
According to a statement on its annual report published earlier this year, Coopers returned pre-tax profits of $36.5 million and grew its beer sales to 82.3 million litres in the 12 months to 30th June 2020.