IBM Australia's profit dropped by nearly AU$20 million in 2020

The local arm of IBM pulled in AU$89.7 million in net profit last year after paying AU$41 million in tax to Australia.

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IBM Australia has made its financial results available for the year to 31 December 2020, reporting a AU$20 million drop in profit when compared to the same period a year prior.

In 2019, the company posted net profit of AU$109 million, but in 2020, the local arm of IBM produced AU$89.7 million.

A report from the Australian Taxation Office in December detailed IBM Australia escaped paying tax in 2018-19, despite reporting a taxable income of AU$60 million on revenue of AU$3.26 billion.

Income tax expense for 2020 was AU$41 million. This included AU$35.5 million for 2020, a AU$1.3 million adjustment for prior years, and a AU$1.8 million R&D tax concession.

The principal activity of IBM Australia, it stated, consists of the provision of advanced information services, products, and technologies, including the marketing of imported and locally produced information processing equipment, software and supplies, the maintenance and leasing of that equipment and software, and professional services.

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Revenue was AU$2.39 billion, comprised of just shy of AU$1.8 billion from services, AU$590 million from the sale of goods, and around AU$9 million from revenue listed as financing income. Revenue was AU$2.59 billion in 2019.

Broken down by type, global technology services contributed AU$868 million, cloud and cognitive software accounted for AU$635 million, global business services for AU$508 million, "intercompany services and sales" for AU$251 million, systems with almost AU$116 million, and the remarketing of ex-rental equipment for around AU$3 million.

The amount of total deferred costs addition and amortisation during the year were just shy of AU$123 million and a little under AU$154 million, respectively.

IBM Australia claims a cost of AU$19.5 million to obtain contracts, with almost AU$100 million listed as deferred costs to fulfil a contract.

While the company did not mention how many staff it employs in Australia, wages and employee-related costs for the 12 months totalled AU$823 million, which included AU$659 million in wages and salaries and AU$39 million in termination costs.

See also: IBM says it's giving employees the opportunity to 'compete for positions'

In September, IBM revealed it had back-paid more than AU$12 million to over 1,600 Australian employees, after entering into an enforceable undertaking with the Fair Work Ombudsman (FWO).

The FWO said Big Blue also failed to pay entitlements, such as superannuation and annual leave loading.

IBM Australia Limited and IBM Global Financing Australia Limited self-reported to the regulator in 2019 that they underpaid employees after failing to apply the relevant awards.

In July 2018, the local arm of IBM was handed a AU$1 billion contract from the Australian government to be its whole-of-government technology partner, which means all 17 departments -- even those not incumbent to IBM -- will be using Big Blue systems until 2023.    

IBM Australia's immediate parent entity is IBM A/NZ Holdings Pty Limited, a company incorporated in Australia. The company's ultimate parent entity and ultimate controlling party is International Business Machines Corporation -- IBM Corporation -- a company registered in the United States.

For IBM, revenue last year was $77.1 billion.

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