Facebook Australia pays more tax in 2020 despite profit and revenue decline

The Australian arm of the social media giant Facebook reported paying AU$20.2 million in income tax during FY20.

Facebook Australia has reported after-tax profit for 2020 financial year slipped down to AU$17.7 million from last year's AU$22.7 million.

Revenue came in at AU$155 million, slightly lower than the reported AU$167 million for the 2019 financial year. Of that, approximately AU$153 million compromised of online advertising sales. The remaining revenue came from services, which amounted to just under $2 million.

Despite a reduction in revenue, the Australian arm of the social media giant had a higher income tax expense this year than the previous year. The company footed a AU$20.2 million tax bill, up from the AU$16.8 million tax expense last year, off the back of AU$6.1 million in tax on share-based payments and an adjustment of AU$2.7 million for prior years.

The Australian outfit described itself as a reseller of advertising services to local customers, and from that activity, it took in just over AU$746 million from customers, a AU$37 million increase on last year. Under the line of payments to suppliers and employees, its outflows totalled AU$730 million, an increase of AU$65 million on last year.

Facebook Australia reported having 162 employees in FY20, an increase from 139 employees during the last financial year. In turn, employee wages increased from AU$55 million to AU$67 million during the 12-month period.

Other notable line items during the year for Facebook Australia included the significant decline in expenses related to marketing and sales. For FY20, the company spent only AU$8 million in marketing and sales, compared to the AU$28 million during FY19.

Unsurprisingly with COVID-19 restrictions in place for most of the 2020 financial year, travel and entertainment expenses also declined to AU$836,000, compared to the AU$5.2 million Facebook Australia splashed out on the category in FY19.

Professional services expenses, on the other hand, more than doubled year-on-year from AU$8 million to AU$17 million.

The immediate parent entity of Facebook Australia is Facebook Global Holdings and the ultimate parent company is Facebook Inc, both of which are based in the United States.

On Monday, Speaker of the House of Representatives Tony Smith ruled out as contempt of Parliament Facebook's decision to ban former Liberal MP Craig Kelly from its platforms at the end of April for repeatedly sharing misinformation about COVID-19.

Kelly raised the request to Parliament on May 13, citing that the ban was a form of "improper interference" under section 4 of the Parliamentary Privileges Act 1987 and it "impeded on his ability to communicate with his constituents, and his constituents' ability to communicate with him, thereby impeding his ability to represent their interests".

"While the action described by Member of Hughes does appear to have been directed specifically at him … I am not in the position to determine that this represents a prima facie case of an improper interference, as required under the Act ... there is no evidence ... to suggest that the particular action by Facebook was directed at the member in his capacity as a member," the speaker stated. 

Updated 24 May 2021, 4.12pm AEST: The speaker's statement about former Liberal MP Craig Kelly's Facebook ban added.

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