Kogan defeats ispONE in Supreme Court battle; Govt paper addresses tech giant tax tricks

Mobile retailer Kogan Mobile has won its court battle with Telstra wholesaler ispONE. The wholesaler has agreed to stop suspending Kogan Mobile users from its network without Kogan’s approval, unless in accordance with a service suspension policy.

The wholesaler has also dropped its counterclaim against Kogan.

Last month, Kogan launched legal action against ispONE after the latter booted Kogan’s customers from its network without notifying Kogan. According to Kogan, this constituted a breach of the agreement the two companies had.

ispONE then launched a counterclaim saying that Kogan engaged in misleading and deceptive conduct by calling one of its mobile plans “unlimited”, leading to the problem of overconsumption by users.

The court found that ispONE breached its agreement with Kogan when it blocked 211 of Kogan’s customers from its network and suspended more than 700.

The court ordered ispONE to pay Kogan’s court costs and any incurred loses.

ispONE has also abandoned its counterclaim against Kogan.

The wholesaler has now said the 50,000 SIM cards, initially due to Kogan on 10 April, are expected to be delivered on 10 May.

Interestingly, ispONE’s counsel wanted a reference in the new agreement saying it was actually Telstra that suspended users.

Kogan’s counsel, however, argued that the reference should be removed.

Earlier in the court case, Kogan’s lawyers tried to get communications between Telstra and ispONE relating to the suspension of Kogan customers presented to the court.

ispONE had told Kogan Mobile on several occasions that Telstra was “very upset about Kogan’s offering in the marketplace”, Kogan’s lawyer said.

He also said that the product was drawing customers away from other providers, including Telstra.

Govt takes aim at multinational tax trickery

The tax practices of multinational corporations - including several tech giants - have once again come into the spotlight, with last week’s release of a federal government discussion paper on the subject.

Earlier this year, Labor MP Ed Husic derided consumer tech giant Apple for accruing revenues of $6 billion in Australia last year, but paying only $40 million in tax - less than 1% of its income.

At the time, Federal Assistant Treasurer David Bradbury said Apple’s numbers highlight the growing trend among multinationals of ‘transfer pricing’, a tactic where the local branch of a multinational will reallocate charges and resources to a part of the company that operates in a country with a lower tax rate. This allows the company to avoid the higher tax rates of countries like Australia while still capitalising on its markets.

Now, the government has released an issues paper (PDF) on the tax practices of global companies and is seeking public input on the matter.

“Last year, the government asked the Treasury to develop a Scoping Paper to examine the risks to the sustainability of Australia’s corporate tax base from the way current international tax rules are able to be used to minimise or escape taxation,” the issues paper reads.

“The purpose of this Issues Paper is to seek views of stakeholders and the community more broadly to ensure the analysis in the Scoping Paper captures and addresses the key issues.”

A major point in the issues paper is whether the tax concepts and laws developed for the industrial age are still applicable in today’s information age.

The paper also considers the effects of the “rise of Asia” and “growing concerns over the fiscal position of some advanced economies following the global financial crisis” might be having on the global economy.

The paper flags the possibility of several potential changes in policy to address international taxation concerns.

Interested parties have until 31 May 2013 to submit a comment to the Treasury.