Dearth And Taxes In Australia
Toyota’s having some pretty rotten luck recently. First was “acceler-gate”, the mass hysteria of how Toyota cars were going out of control and murdering innocent people. Then came stories of people blaming Toyota cars for accidents, when in reality it was the driver’s fault (or in the case of Jim Sikes, a scam). You would have thought this would pour oil over troubled waters for Toyota, right? Nope. The malaise continued. Then came the public humiliation of the senate hearings. Did anybody in the media point out the conflict of interest for the senate? Well, if they did, nobody listened. So, while Toyota is fire fighting in North America and is having a bit of a rough time in Europe, at least things are OK in Australia. A market where Toyota dominated for 5 years. Well…
On July the 5th, 2010, The Sydney Morning Herald (SMH) reported how Toyota’s Australian division reported a profit of Au$182.3m ($154m U.S.) for 2009. This was an increase of 4.95 percent from the previous year when they reported Au$173.7m ($147m U.S.) in profits. Yep, life was good in Oz…for 24 hours.
The next day, SMH reported how that profit turned into loss. 24 hours from profit to loss? Were they investing money in another of Bernie Madoff’s schemes? Maybe, they saw the email from Mrs Cammu Cori-Ganacha? No, the answer comes from the Australian government. The Australian tax office slapped Toyota with an Au$250m ($211m U.S.) fine. Toyota Australia was coy with details about this hit to the wallet, but they did say it was restitution for “prior years”.
“This settlement has been reached following a thorough review with the ATO on a very complex issue. We believe we conduct our operations according to all relevant rules and regulations regarding financial matters.” said Toyota spokesperson Glenn Campbell. “Toyota Australia will continue to work with the ATO (Australian Tax Office) to ensure we have tax clarity and certainty to all parties.”. Ouch! pwned by 2 governments? Toyota must be hurting. Well, they can still take comfort in the fact that they are still number one in Australia, selling a record 214,465 cars in 2009 leaving them with a market share of 20.2 percent. No worries, cobber(!)
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Hardly surprising - they are facing a left leaning federal government that is running out of cash and are desperate to raise money. They are probably going through all major corporations tax records to see if they can squeeze a few more dollars.
There are two known tax dodges with companies like Toyota: Toyota Australia builds Camries and Aurions for the local market. 1. They export some of their production to the middle east. This entitles them to tax credits per the value exported, allowing them to apply this to other models they import, such as SUVs and so on. This artificially lowers the price of the incoming model, but allows them to charge full whack to the consumer == more profits. 2. They import V6 engines for these models from Japan. At hugely inflated prices, thus shifting profits back to (lower tax cost) Japan. I've heard figures like $8000 for an engine. Do the maths and think like a crooked accountant. It's easy to game both of these systems to shift profits to places that cost less and make certain cars even more profitable. I'm glad they're starting to fix up these issues.