Apple Australia’s Silicon Valley cash splash

The massive dividend paid to its US parent came after Apple kept local profits steady despite COVID’s hit to the economy.

The Apple Store in Sydney’s CBD. Picture: NCA NewsWire/Gaye Gerard

Apple’s Australian operation has dipped into its cash reserves to almost double its dividend to be paid to its Silicon Valley parent, sending hundreds of millions of dollars offshore.

The move came after Apple managed to keep its local profits steady despite the hit to the economy from COVID-19.

Apple Australia’s audited financial statements for the financial year ending September 26 and obtained by The Australian, shows the company reported consolidated revenue of $9.789bn though sales of iPhones and MacBooks, up 4.2 per cent on the $9.392bn recorded the year earlier.

Pre-tax earnings amounted to $408.2m, with an income tax expense of $199.85m meaning the company paid tax at a rate of 29.4 per cent. which is in line with the headline corporate tax rate.

Apple and other tech giants including Google and Microsoft have come under scrutiny over the level of tax paid at a local level. But a major global campaign to force multinationals companies to contribute more tax by cracking down on profit shifting, spearheaded by Australian Tax Commissioner Chris Jordan has seen payments increase in recent years.

Apple’s Australian revenue figure represents just a fraction – less than 3 per cent – of the $US274.5bn in global revenue recorded by the tech giant’s parent company in 2020.

Net profit after tax in Australia was $288.35m, up 0.6 per cent on the $286.7m booked in 2019.

Despite the modest profit increase, the company dipped into its cash pile to paid $512.4m in fully franked dividends to its parent company, up almost 92 per cent on the $267m sent overseas last year. The move followed former US President Donald Trump slashing tax rates for corporate profits earned offshore, which has spurred on a rush of cash back to the United States.

The bumper dividend, worth almost two years of after tax profits, drained the company’s bank accounts with cash and cash equivalents at the end of the year decreasing from $607.7m in 2019 to just $77.9m this year. The

Through the year the company earned the most through the sale of products like the newly-released Apple Watch SE, iPhone 12 lineup and new iPad models.

Revenue for product sales was $8.36bn while $1.42bn was booked through the sale of services.

The company had 3896 Australian employees at the end of the financial year, to which more than $268m in wages and bonuses was paid to, including $22.4m in compensation to “key management personnel.”

The value of Apple’s Australian consolidated gross assets was $2.19bn and the tech major paid $63.9m for its retail leases over the past year. Lease payments were not broken out for the previous year.

The bumper dividend comes as US-listed Apple prepares to hand down what is expected to be its first ever quarterly results with earnings in excess of US$100bn on Wednesday.

Analysts are tipping continuing strong sales results for the company’s desktop computers, with the work from home revolution benefiting the entire category.

It is also expected the results will show a concentrated surge in phone sales, after the iPhone 12’s release date was delayed, impacting revenue in the last quarter.