LENDLEASE AUSTRALIA TAX DISCLOSURE INFORMATION – 2015
BACKGROUNDThe last few years has seen a global focus on the international tax regime and the tax affairs of multinationals, particularly focusing on whether corporates are paying their fair share of tax in the jurisdictions in which they operate. As a result, the Australian Government has directed the Australian Taxation Office (ATO) to publish certain tax information in relation to any public Australian company with income in excess of A$100 million. The Corporate Tax Transparency Report for 2014-15 was released by the ATO in December 2016.
ABOUT LENDLEASELendlease is committed to creating and delivering innovative and sustainable property and infrastructure solutions for future generations.
Founded in Sydney in 1958 by Dutch immigrant and innovator Dick Dusseldorp, Lendlease was born out of a vision to create a company that could successfully combine the disciplines of financing, development and investment.
Lendlease is a leading international property and infrastructure group with operations in Australia, Asia, Europe and the Americas.
Headquartered in Sydney, Australia, Lendlease has approximately 12,000 employees internationally. Our regional head offices are located in New York, Singapore and London. Our core capabilities are reflected in our operating segments of Development, Construction and Investments. Combining these capabilities across the property and infrastructure value chain has allowed Lendlease to offer innovative integrated solutions for our clients.
LENDLEASE AND THE ATOLendlease is an active contributor to the tax debate in Australia because we believe in a robust and fair tax system for all. We pride ourselves on having an open and transparent relationship with the ATO, where we seek to comply with all our tax obligations.
Lendlease’s Global Tax Policy, which has been approved by the Lendlease Board, underpins our approach to tax. Under the Policy, Lendlease seeks to:
- Comply with the relevant tax laws of all jurisdictions where we conduct business;
- Not participate in tax evasion or aggressive tax planning;
- Not provide tax advice to third parties;
- Protect the reputation of Lendlease at all times; and
- Establish and maintain open and respectful relationships with tax authorities in all countries in which we operate.
LENDLEASE’S TAX PROFILEFor Lendlease, company tax is complex. This is compounded by the fact that Lendlease, through its integrated model, operates across a number of industries, our income is derived from a number of countries, and like many other property industry companies, Lendlease is structured as a stapled group.1 Income tax is paid by Lendlease in line with the relevant tax law of the jurisdiction in which the income is generated.
Lendlease currently operates in 10 countries. In 2016, approximately 25% of Lendlease’s earnings were derived from our regional businesses in Asia, Europe and the Americas, and approximately 75% was generated from operations in Australia.
The corporate tax rates applying to our regional businesses differ to the Australian corporate tax rate of 30%. Some jurisdictions in which Lendlease operates have corporate tax rates lower than Australia (e.g. Singapore and UK); while other jurisdictions have higher corporate tax rates (e.g. US and Japan).
Lendlease Trust is not subject to income tax under current Australian income tax law. It is the unitholders who receive distributions from the Lendlease Trust who pay tax on the Lendlease Trust earnings.
ATO DISCLOSUREIn December 2016, the ATO published the total income, taxable income and tax payable for FY15 for all public Australian companies with income in excess of $100m. This is a recurring annual disclosure and the second time this information has been publicly disclosed.2
This information is published on the Australian Government Data website.
Lendlease Corporation Limited’s3 total income, taxable income and tax payable for FY15 is published on this website.
How much tax will the website show Lendlease paid in FY15?While Lendlease pays a significant amount of tax each year, the data disclosed by the ATO will only reflect corporate income tax. No corporate income tax was paid by Lendlease in Australia in FY15.
Why is the corporate tax paid zero?For FY15 Lendlease’s allowable tax deductions exceeded taxable income for the year. This means Lendlease is in a ‘tax loss’ position in Australia.
Why do deductions exceed income?There are a number of reasons for this. Broadly:
- Timing differences4
- Some income, while booked for accounting purposes in FY15, was not taxable under Australian tax law in FY15;
- Some business costs, which were capitalised for accounting purposes in FY15, are deductible for tax purposes under Australian tax law in FY15;
- Some business costs arising in earlier income years became deductible for tax purposes under Australian tax law in FY15;
- We had carried forward an amount of capital losses, which could be offset against capital gains generated in Australia; and
- Income earned by our regional businesses in Asia, Europe and the Americas are generally subject to tax in the jurisdictions in which the income was generated and is not taxed again in Australia.
Did Lendlease pay tax in Asia, Europe and the Americas during FY15?Yes, corporate income tax was paid across these jurisdictions for FY15 which in total amounted to A$122.5 million.
Has Lendlease deliberately engineered its position to pay zero tax?No. Lendlease is an active contributor to the tax debate in Australia because we believe in a robust and fair tax system for all. We pride ourselves on having an open and transparent relationship with the ATO, where we seek to comply with all our tax obligations. Our FY15 tax position complies with Australian income tax legislation. We have discussed Lendlease’s FY15 tax assessment with the ATO and no adjustments have resulted from this process.
How many other companies are not paying tax?We cannot speak on behalf of other companies, but we understand our position is not unique.
Will Lendlease pay tax in FY16, and in future years?We do not expect Lendlease to pay income tax in Australia for FY16 due to the utilisation of prior year tax losses. Our forecast suggests that we may be in a similar position, at least in FY17.
Is Lendlease happy to disclose that it paid zero tax?We pride ourselves on having an open and transparent relationship with the ATO, where we seek to comply with all our tax obligations. As part of our participation in an early engagement and continuous monitoring program, we have discussed Lendlease’s FY15 tax return with the ATO and no adjustments have arisen from this process.
Has Lendlease signed up to Australia’s Voluntary Tax Transparency Code?Lendlease Corporation Limited has registered with the Board of Taxation its commitment to adopt the Australian Voluntary Tax Transparency Code for FY17.
1 This means that shares in Lendlease Corporation Limited and the units in Lendlease Trust are traded as a single security on the Australian Securities Exchange.
2 The first Corporate Tax Transparency Report for 2013-14 was published by the ATO in December 2015.
3 Lendlease Corporation Limited is the head entity of the Lendlease Australian Tax Consolidated Group which comprises all wholly owned Australian subsidiary entities.
4 Timing differences are items that are recognised for accounting and tax purposes at different points in time.
For more information see our Taxation Statements and Tax Guides.