Qantas: $46 billion income, zero tax + Virgin may never pay tax + Tiger will never make a profit?

[Sdtravel]

I saw this on ABC yesterday morning and found it amusing. There was no mention of VA or Tiger at all in the news reports. They were touting their 1 in 5 companies dont pay any tax. But only ever mentioned QF not any other company. Seemed a little biased to me.

It was a fair point they made though that i cant make my taxable income $0 and i cant carry my tax losses forward.

 

[BAM1748]

I saw this on ABC yesterday morning and found it amusing. There was no mention of VA or Tiger at all in the news reports. They were touting their 1 in 5 companies dont pay any tax. But only ever mentioned QF not any other company. Seemed a little biased to me.

It was a fair point they made though that i cant make my taxable income $0 and i cant carry my tax losses forward.

I suspect because Virgin doesn't seem to be able to turn a profit in the first instance.

 

[rock86]

It was a fair point they made though that i cant make my taxable income $0 and i cant carry my tax losses forward.

I'd really love to know how that is a fair point though, it's in my opinion, a complete and utter garbage argument.

Any business in Australia, whether small or large, can make their taxable income zero and carry forward losses if their expenses outway their revenue.

In respect to an individual, they can also make their taxable income zero if they have deductions or losses to reduce their salary and wages (this is one argument put up against the generous negative gearing tax breaks). If we're then talking about an individual trying to carry forward losses against their salary and wages, how would this ever happen I'd really love to know, and if you do have losses to carry forward it's more then likely you're running a business in the first place so most of the rules above would apply.

 

[Sdtravel]

Sorry i meant they made a fair point that I cant carry losses forward so why can businesses do it.

 

[rock86]

Sorry i meant they made a fair point that I cant carry losses forward so why can businesses do it.

Carry forward losses on what though? Your salary & wages? Are you making a loss on your salary and wages?

 

[Sdtravel]

Carry forward losses on what though? Your salary & wages? Are you making a loss on your salary and wages?

Back when i was studying at uni and working part time i had more deductions than i paid in tax. I was able to get under the threshold for paying tax.
I got my few hundred dollars back but had deductions that far exceeded that. Would have been nice to carry that forward a bit

 

[rock86]

Back when i was studying at uni and working part time i had more deductions than i paid in tax. I was able to get under the threshold for paying tax.
I got my few hundred dollars back but had deductions that far exceeded that. Would have been nice to carry that forward a bit

So you're saying you want to claim deductions for study? Other then that, I'm stuck at a loss (pardon the pun) at where else you'd have considerable deductions.

 

[Sdtravel]

So you're saying you want to claim deductions for study? Other then that, I'm stuck at a loss (pardon the pun) at where else you'd have considerable deductions.

Not "want to" DID. I did claim deductions for study. $8K for uni fees. $600 for required union fees, textbooks, work to uni travel ect.
My 1 day a week part time job meant i could claim all that as self study.

 

[moa999]

As an individual you can carry forward investment losses for many years (just can't offset against salary)

You could also argue that QF overpaid tax in the pre-2007 years as it hadn't depreciated aircraft sufficiently, leading to higher profit and higher taxes.

 

[rock86]

Not "want to" DID. I did claim deductions for study. $8K for uni fees. $600 for required union fees, textbooks, work to uni travel ect.
My 1 day a week part time job meant i could claim all that as self study.

So where is the actual losses you endured & couldn't carry forward?? You never actually paid more expenses then you earnt at your part time job.

I'm really not sure what you're trying to say, I don't think you're looking at deductions v taxable income v tax payable correctly in this situation.

 

[Sdtravel]

So where is the actual losses you endured & couldn't carry forward?? You never actually paid more expenses then you earnt at your part time job.

I'm really not sure what you're trying to say, I don't think you're looking at deductions v taxable income v tax payable correctly in this situation.

Probably not

 

[rock86]

Probably not

I now see what you've said and understand why we've gone around in circles.

Back when i was studying at uni and working part time i had more deductions than i paid in tax. I was able to get under the threshold for paying tax.
I got my few hundred dollars back but had deductions that far exceeded that. Would have been nice to carry that forward a bit

The thing is, that isn't how tax works. Deductions are offset against income, not against the tax you pay. Same applies for businesses.

 

[Strategic Aviation]

I saw this on ABC yesterday morning and found it amusing. There was no mention of VA or Tiger at all in the news reports. They were touting their 1 in 5 companies dont pay any tax. But only ever mentioned QF not any other company.

Tax-free billions: Australia's largest companies haven't paid corporate tax in three years - ABC News

Not one of Australia's biggest airlines has paid corporate tax since at least 2013, including Virgin and its subsidiary Tigerair, Etihad, Emirates and Qatar.

Each one of those companies has sold billions of dollars worth of tickets in Australia.

When asked for an explanation, both Qantas and Virgin pointed the ABC to their historical losses and the entirely legitimate use of Australia's tax laws that allow them to offset those losses against future profits indefinitely.

Both companies were at pains to point out that, notwithstanding their zero corporate tax liabilities, they had continued to collect and pay departure taxes, fuel and alcohol excises, payroll tax, GST and FBT.

Presumably that's what the Etihad spokesman was alluding to in his statement to the ABC.

"Etihad is fully compliant with all Australian tax requirements, and has paid all the taxes it is obligated to do so under Australian law."

 

[Strategic Aviation]

Qantas could be flying towards fleet renewal spending cliff, says S&P - Sydney Morning Herald

Qantas Airways has put off buying new aircraft for too long and could be speeding towards a spending cliff as its fleet ages, according to S&P Global Ratings.

The airline has run up record profits in the past two years after successfully pulling off a turnaround plan following its disastrous $2.8 billion loss in 2014.

But in new research, S&P analyst Graeme Ferguson says these profits have also been supported by reduced aircraft investment, along with write-downs and the fact it has not paid company tax.

"Despite much fanfare surrounding the new Dreamliner, Qantas's aircraft investment has remained subdued over the past few years," Mr Ferguson said.

"Since its financial turnaround in fiscal 2015, Qantas has used surplus capital to fund shareholder returns rather than to grow invested capital.

"We do not view this as sustainable."

Qantas has said it does not expect to grow spending until 2020, at which point it will have had the brakes on capital investment for seven years.

The need for funding could arise around the same time as it had to resume paying company tax, he said.

The airline has not paid company tax since 2011, as it ran up hefty losses and has offset 2014's $2.8 billion loss against earnings in the years since. However, those offsets will soon be exhausted.

 

[docjames]

Surely depreciation is greatest when aircraft are newer, so when the current tax credits are all gone it would be the perfect time to reduce (taxable) profit by buying new aircraft.......

 

[rock86]

Surely depreciation is greatest when aircraft are newer, so when the current tax credits are all gone it would be the perfect time to reduce (taxable) profit by buying new aircraft.......

Definitely will be if they are using diminishing value method.

 

[Deleted member]

Sorry i meant they made a fair point that I cant carry losses forward so why can businesses do it.

Yes you can. You just need to make a (tax) loss.

 

[Isochronous]

No surprises that the braindead leftists at the ABC don't understand company tax - they seem to think it outrageous that companies don't have to pay tax when they LOSE money!

 

[CaptJCool]

No surprises that the braindead leftists at the ABC don't understand company tax - they seem to think it outrageous that companies don't have to pay tax when they LOSE money!

What's been interesting about the US EXPERIENCE is the losses no longer claimable. A significant amount can no longer be carried forward to offset against future profits. It's just written off.....it also means the corp must absorb those losses out of its own capital instead of the Govt carrying the can for them.

The franking credit system in Australia actually means corporations pay no tax. It's a PAYG-I system for dividends. Works well when shareholders reside in Australia but operates like a. Withholding system for foreign shareholders ....

 

[Strategic Aviation]

Qantas could start paying corporate tax again after $607 million profit - ABC News

In an interview with the ABC's The World Today, Mr Joyce signalled the airline might be in a position to start paying corporate tax again in the next financial year.

While stressing he was not providing guidance, Mr Joyce said the "carry forward" losses from previous difficult years might soon expire requiring the airline to pay corporate tax once again.

"This year if the performance is the same as last year we would expect from July 1 to be paying tax for that period," he said.

"I can't give an outlook but if we make the same amount of money, then we will erode all of the tax losses of previous years and we will be starting to pay tax in the next financial year."

Mr Joyce's optimistic expectation comes as he takes a high profile in a campaign with the Federal Government to cut Australia's corporate tax rate in line with the United States.

"I think Australia will become uncompetitive if it doesn't fix this corporate tax issue because it will mean that we cannot generate jobs and we cannot generate increases in pay above inflation and it means everyone will suffer," he said.

Mr Joyce's campaign for a corporate tax cut coincides with caution from Reserve Bank governor Dr Philip Lowe who warned last week that cutting corporate tax at the expense of higher deficits would be "a big mistake".

However, Mr Joyce said Dr Lowe's comments needed to be viewed in context of concerns about Australia's competitiveness with low tax nations.