A shocking revelation has come to light, highlighting a major loophole in our corporate tax system. A call centre operator, Telco Services Australia, managed to avoid paying corporate tax for two consecutive years, even after securing a lucrative government contract worth millions.
This story, uncovered by Guardian Australia, delves into the complex world of corporate tax avoidance and the potential implications for government agencies and taxpayers alike. Telco Services, headquartered in Perth, generated an impressive revenue of over $185 million in the 2024-25 financial year, yet reported no taxable income. The previous year's income of $130 million also resulted in zero tax paid.
But here's where it gets controversial: this tax-free period coincides with the company's multi-million-dollar contract to manage call centre operations for Services Australia, a key government agency responsible for social security. Jason Ward, a leading analyst, suggests that the company's structure appears to be designed to evade tax obligations in Australia.
The financial documents, filed on Christmas Eve, reveal an intriguing web of related-party transactions totaling $166.5 million in the last financial year. However, the identities of these related parties remain undisclosed. According to Ward, these payments effectively eliminate profits, resulting in no taxable income and, consequently, no tax liability.
And this is the part most people miss: while the company itself paid no tax, the directors and key management personnel saw their payments increase during this period, even after reporting a financial loss. It's a complex situation, and while there's no suggestion of illegality, it raises important questions about transparency and accountability.
Telco Services is part of the TSA Group, a Perth-based entity with a workforce of over 4,300 employees across five contact centers in Australia and the Philippines. Besides its government contract, the group also provides outsource services to major corporations like Telstra and NRMA Insurance.
A TSA Group spokesperson clarified that while Telco Services itself didn't record taxable income, other associated entities did, and the appropriate tax was paid. They added that the taxation arrangements were assessed by an independent auditor. The spokesperson also mentioned that Telco Services had paid tax in previous years, and that the entities which paid tax were not subject to public reporting requirements.
The group's complex structure, with various businesses rarely lodging public financial accounts, makes it challenging to verify its overall tax payments and the flow of related-party transactions between entities. This lack of transparency is a concern, especially for a large operator with such a significant workforce and revenue stream.
Another operational arm of TSA Group, Telco Sales, holds a prominent contract with Telstra. This company paid just over $700,000 in corporate tax in 2022-23 but received a partial refund the following year, despite generating over $120 million in revenue during those two tax years. The Services Australia outsource contract is held by the Telco Services arm of TSA Group, but the staff are employed by a separate entity, Trimatic Management Services.
Trimatic received a $5 million grant from the Western Australian government in 2024 to expand call center jobs in the state. Services Australia, the agency responsible for social security, hosts one of the largest contact center networks in the country, with a workforce primarily consisting of permanent Australian public service staff, supplemented by contractors.
Guardian Australia has been investigating the increasing reliance of government agencies on outsource call centers and the stalled efforts to reduce external consultant and contract worker dependency. The majority of calls to the Australian Taxation Office's phone line are now answered by workers from private operators, including Probe Operations, Serco, and Concentrix, with tax agents complaining about inexperienced staff and deteriorating service.
This story sheds light on a critical issue, and we want to hear from you. Do you have any insights or experiences to share? Email jonathan.barrett@theguardian.com and join the conversation. Your voice matters in this ongoing debate about corporate tax avoidance and government outsourcing.
