It is well-known that high net worth individuals and companies tend to find any loophole they can to avoid paying taxes. Recent evidence shows that this applies to Anthony Pratt, who is the richest man in Australia. Not only does his company do its best to avoid paying taxes, but it succeeds to the point that it pays virtually none.
Anthony Pratt is the richest man in the country according to the list that The Australian and the Australian Financial Review maintains. The key company in question is his global packaging business. According to records, since 2013, the company made over $340 million in profits but paid very little tax. This is based on tax and corporate documents.
Income Is Hidden
A web of legal entities and holding companies hide the specifics of the company’s income and that of Pratt. A Pratt family trust owns Pratt Consolidated Holdings, which collects the dividends that come from other companies, moving them to the trust. The 2018 report from the company, which is the most recent, does not detail which of the Pratt companies it owns. Some of the notable companies it may own include Visy Packaging, Pratt Industries in the United States, which is also a packaging company, and a European recycling business.
The accounts that Pratt Consolidated Holdings filed at the Australian Securities and Investments Commission indicate that from 2013 to 2018, show some surprising numbers. In that period, it received the net tax benefit of around $2,300 and paid over $295 million to the Pratt family trust.
The federal government provides some relevant data thanks to the tax transparency laws. This data shows that from 2014 to 2017, Pratt Consolidated Holdings accumulated $327 million in taxable income. However, it only paid tax in 2017, paying around $18.85 million. To save readers the math, this is 5.8 percent as the effective tax rate. For context, the headline corporate tax rate in Australia is 30 percent.
What Analysts Say
The analysts that talked to the Guardian regarding this low tax situation indicate that the company seems to draw on the tax losses from previous unprofitable activities. This is legal to do, yet still “shocking” to many analysts. That shock specifically comes from the fact that Pratt Consolidated Holdings did not outline the source of the dividends, which is frequently done despite not being a legal requirement. This results in a lack of transparency that has led to the headlines regarding Pratt and his companies.
Pratt’s Businesses Also Use Tax Havens
Experts are also fully aware that Pratt’s business empire relies on tax havens, including Singapore, Bermuda, and Hong Kong. Allpak Trading is the Hong Kong company from Pratt’s empire that owns Visy Recycling Europe and that an Australian Visy group company owns Allpak. It is also clear that Visy has a trading arm in Singapore.
Although Pratt’s companies pay almost no taxes, it is currently legal for them to do so. The company’s accountants are aware of the appropriate loopholes and take advantage of them.
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