Champions league tax dodger Google Australia is up to its usual tricks. Michael West and Josh Barnett discover a $6B black hole.
The Google Australia financial statements for 2024 are out and display the usual accounting chicanery by the tech giant and its auditors from EY. The group reported revenue of $1.98B for the year. But is that all? Is that all the company made by selling advertising and so forth?
No, this is a $10B company masquerading as a $2B company. The accounting is a sham because Google discloses way down in the back of its notes to the accounts that it siphoned out $8.2B in ‘service fees’ to associates of its parent company Alphabet.
They used to disclose in the Revenue Note what their actual revenue was but don’t bother with these annoying compliance obligations any more. You can only get an idea of their real revenue by delving into the Related Party Transactions note down the back.
Tax payable was $83M, which sounds like a lot, but when you consider the group probably made $10B selling advertising services and what not; and when you consider that the real profit margins must be immense because this is really just a bunch of guys with computers and desks, it amounts to belly-button fluff.
To be fair, there should be some transfer of intellectual property value … but $8.21B? An increase of $1B on the previous year? That’s just robbery.
They flog advertising for Australian products and services in Australia to Australian customers on Australian computers.
The government doesn’t help, mind you. Thanks to its silly Digital Media Bargaining Code ‘reforms’ – basically an extortion racket which funnels Google cash to media mates News Corp, Nine Entertainment and others – Google Australia must surely claim the Code payments as a tax deductible cost of doing business.
We have asked them this – no joy there. It is reasonable to conclude then that the public is subsidising this racket to prop up Rupert and the likes. Google pays media moguls more than it pays in tax.
Interestingly, the group discloses that it employed 2,190 people in 2024. As total employee benefits expense came it at $990M for the year (covering wages, super, share-based payments and short-term bonuses) this equates to an average cost per employee of $452,200 apiece.
Whether that is a true representation of how much Google’s desk jockeys are paid, who knows? As with all multinational tax avoiders, the trick is to bulk up the costs as much as possible in Australia and get the money out to places where the corporate income tax is lower, such as Singapore, the US and the Caribbean.
And they do this year after year, mostly via ‘service fees’ but also by piling up other costs as much as they can, even giving their foreign associates loans on which tax free interest is paid.
When you think about it there is no compelling reason for a monopoly like Google, which spits out large licks of cash daily, to be borrowing money from offshore … apart from gouging a little extra on the tax front. But that’s multinationals for you.
Good old EY (formerly Ernst & Young) charged $599,000 for its auditing services in 2024, a 68.7% increase from the $355,000 paid in 2023. But it gets an indemnity also from Google so … why bother having an auditor anyway, if it’s a case of all care and no accountability?
Such is life in multinational tax avoidance land.
By the way, has anybody noticed how when you use Google Maps to drive about town, they direct you onto toll-roads when they can. Seems there may be some deal with toll-road operator Transurban. Anyone?
Google Australia pays pittance in tax, pays media moguls instead
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.
Josh is a professional musician and cameraman who is now working with Michael West Media to develop The West Report and other visual content across major social media channels