Brisbane-based <a href="https://www.apartments.com.au/developers/red-co">Red &amp; Co Developments</a> has officially launched its $250million COMO apartment development in Varsity Lakes, while simultaneously commencing construction.&nbsp;

Building work is now underway at COMO following the appointment of <a href="https://www.apartments.com.au/builders/5point-projects">5Point Projects</a> as contractor to deliver the boutique development which will rise on a 2857 sqm site overlooking Lake Orr at 22 Lake Street.

When completed, <a href="https://www.apartments.com.au/new-apartments/como-varsity-lakes-22-lake-street-varsity-lakes-qld-4227">COMO</a> will comprise 156 apartments across 16 levels located in the heart of Varsity Lakes.

[smartcode_project:default project_id=135546 project_image_fid=363515]

The project, which will sit alongside Bond University, will deliver a diverse array of apartment designs comprising one-, two- and three-bedroom residences that have already attracted interest from local and interstate investors as well as an array of owner occupiers looking to gain a foothold in the precinct.

Red &amp; Co, which has largely focused on the Brisbane market in recent years where it has delivered more than 500 apartments and townhouses across 26 projects, has designed COMO to combine tranquil, lakeside living with the vibrant urban convenience of the vibrant Varsity Lakes village.

“We’re thrilled to announce a start to construction of COMO in conjunction with the official launch of the project, our first for the Gold Coast,” said Red &amp; Co Director and Co-Founder David Laverty.

[smartcode_project:default project_id=135546 project_image_fid=363509]

“COMO is superbly positioned to capture the essence of the Varsity Lakes village lifestyle and its thriving café and dining precinct, while delivering a much-needed diverse supply of premium residences for the local market.

“Pre-launch inquiries have been strong among both local and interstate investors and owner-occupiers, including downsizers and upgraders who appreciate the value proposition that COMO represents.”

Prices at COMO start from $1,000,050.

[smartcode_project:default project_id=135546 project_image_fid=363511]

Designed by <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, the COMO development incorporates an extensive range of amenities for residents including a 25-metre rooftop lap pool, sundeck, barbecue and dining areas, as well as multiple rooftop pickleball and paddleball courts, a wellness and activity centre, gym, sauna, plunge baths and landscaped gardens.

“COMO presents a rare opportunity to secure a stylish, lifestyle-focused home in one of the Gold Coast’s most sought-after neighbourhoods,” added Laverty.

“The rooftop will be the epicentre of fun for residents with an array of amenities for residents that are quite unique for a boutique project such as this, all while offering spectacular vistas across the Gold Coast as far north as Southport and south to Burleigh.”

[smartcode_project:default project_id=135546 project_image_fid=363514]

&nbsp;

Red &amp; Co has chosen the Varsity Lakes site for its proximity to top-tier schools, major shopping hubs, such as Robina Town Centre and its CBD offering, as well as key Gold Coast transport links, including Varsity Lakes Train Station.

COMO will be located just a short walk to shops, cafes and restaurants in Varsity Lakes and just a 10-minute drive to the Burleigh Heads beachfront.

With construction currently underway, Red &amp; Co anticipates COMO will be completed in 2028.

[smartcode_project_cta:default project_id=135546]

Joel Robinson

Red & Co to launch debut Gold Coast development Como Varsity Lakes as construction commences

Longstanding Gold Coast developer Raptis has acquired a prime development site on Surf Parade for its next Broadbeach apartment project.

Progressing towards completion of <a href="https://www.apartments.com.au/new-apartments/the-sterling-broadbeach-6-8-george-avenue-broadbeach-qld-4218">The Sterling Broadbeach</a>, 90 apartments on nearby George Avenue, <a href="https://www.apartments.com.au/developers/raptis">Raptis</a>, led by second-generation family man Evan Raptis, has picked up a block on the corner of Surf Parade and First Avenue.

The site had been earmarked for a luxury apartment project with 33 full-floor apartments across a 37-storey tower. Raptis will go back to the drawing board and create a building more appropriate for the site. The development application will be lodged later this month.

Evan Raptis told Apartments.com.au the site ticks all the boxes.

"Broadbeach is a suburb we've developed several buildings over the years. Surf Parade ticks all the boxes for the type of apartment development we want to deliver."

Raptis had several pre-lodgement meetings with council to ensure they are aligned in the development.

<img alt="Raptis" data-entity-type="file" data-entity-uuid="f0d58573-07a4-47a8-9f5e-fbf35fb03dc3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-03-05%20at%204.58.23%E2%80%AFPM.png?VersionId=iczZEd_4_o4UL0PHMPJGfy_q3tv96J5i" />

Surf Parade has emerged in recent years as one of the most popular streets in Broadbeach for development.

South East Queensland developer Mosaic Property Group kicked it off with Marella by Mosaic. Bassar Group sold out Infinity on the street, while for its&nbsp;first Gold Coast development, Polycell grabbed a Surf Parade site for <a href="https://www.apartments.com.au/new-apartments/the-rochester-broadbeach-143-surf-parade-broadbeach-qld-4218">The Rochester</a>, which is nearly sold out.

Melbourne-based developer Hirsch &amp; Faigen recently launched its fourth Gold Coast project on the exclusive strip. The Eveleigh Broadbeach will have 100 apartments across a 31-storey building designed by Rothelowman.

GV Property Group site development specialists Antonio Mercuri and Luke Reaby, who both amalgamate sites and sell shovel-ready sites to developers up and down the Gold Coast, sold Surf Parade to Raptis.

Raptis secures prime Surf Parade site for next Broadbeach apartment development

Less than two years after breaking ground, Gardner Vaughan Group is celebrating the topping out of Bask, its second development in the exclusive coastal enclave of Bokarina on Queensland’s Sunshine Coast.&nbsp;

Located only minutes from the beachfront, the two seven-storey luxury apartment towers, known individually as Mydas and Caretta, offer a selection of one-to-four-bedroom residences with views of Lake Kawana, the Glasshouse Mountains, and Bokarina Beach.&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=333359]

Gardner Vaughan Group Commercial Director Sam Gardner said the milestone marks the home stretch for construction, with first residents expected to be able to move in from Spring 2026.&nbsp;

“This is a significant milestone in bringing this development to life and represents our confidence in this region’s long-term growth and appeal,” Gardner said.&nbsp;

“With 85 per cent of apartments already sold, buyers are joining an established, coastal village that offers the very best of the Sunshine Coast – seasonally patrolled surf beaches, renowned restaurants, and links to established health and retail.&nbsp;

“The final collection of three- and four- bedroom apartments range in size from 127sqm to 300sqm, each with two or three secure car parks and storage, and with construction fast approaching completion we don’t expect the last few apartments to remain on the market for long.”&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=333362]

Local restaurateur Luke Stringer, who co-owns and manages the award-winning Bocca Italian and Playa Mexican restaurants in Bokarina, has lived in the beachside suburb for 18 months and worked there for more than three years, and said the beachside suburb was thriving.&nbsp;

“It’s fair to say Bokarina is finally stepping into the sun and there’s a lot to love about the place,"&nbsp;Stringer said.

"It’s such a great community, where you see the same smiling faces every morning and everything’s within easy reach – it’s the perfect hub in the middle of the Sunshine Coast.

“When we first opened Bocca Italian, we were the lone restaurant, but it’s been amazing to see how the area has grown. The more venues that open, the busier it gets for everyone. When Playa Mexican opened its first Saturday night, Bocca had a record night and Playa was packed too, which blew us away how everyone is thriving.&nbsp;

“There’s a great energy around the place now, and people are really embracing Bokarina as a food and lifestyle destination.”&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=363368]

Stringer joined other buyers at Bask Bokarina and the Gardner Vaughan Group team to celebrate the topping out at a special event in February.&nbsp;

Located in Kawana Waters, midway between Caloundra and Maroochydore, Bokarina locals enjoy scenic walking paths around Lake Kawana, playgrounds, beachfront boardwalk and parklands, alongside all the convenience of a masterplanned beachside community.&nbsp;

“You see people jogging or swimming in the morning, then grabbing coffee at the cafes, people are really embracing the area and all this growth is bringing more people to Bokarina,” Stringer added.&nbsp;

To take advantage of the vistas, each of the 135 apartments at Bask is designed with full size windows and high ceilings that provide an abundance of natural light.&nbsp;

Prices for the remaining three-bedroom apartments start at $1,599,000 and four-bedroom apartments start at $3,149,000.&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=363369]

The mixed-use development also features ground-level retail space for cafés, dining options and boutiques, including the soon-to-be-opened ‘Corner Shop’, by the team behind Noosa’s well known ‘Organika’.

Sam Gardner said Gardner Vaughan Group’s 37-year history building and developing across South East Queensland has contributed to the success of its second development in Bokarina, which follows the recently completed Zinc Apartments.&nbsp;

“We care how people live and this is reflected in the way we approach the design and delivery of every development,” he said. “Furthermore, as a builder-developer we have full control over the construction program and our 100 per cent completion rate is something people can draw confidence from.”&nbsp;

Founded by civil engineers Guy Gardner and Darryl Vaughan in 1989, the family-owned business has evolved from a consultancy firm to an award-winning builder-developer, with projects across the Sunshine Coast, Moreton Bay, Brisbane and the Gold Coast.

[smartcode_project_cta:default project_id=141609]

Gardner Vaughan Group tops out Bask Bokarina apartments

Prolific Melbourne developer <a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a> has launched its fourth new Gold Coast development in as many years.

<a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a>, led by Daniel Faigen and backed by Eddie Hirsch, co-founder of United Petroleum, has unveiled The Eveleigh, on a prime 1,100 sqm site at 7-9 Surf Parade in the heart of Broadbeach.

<a href="https://www.apartments.com.au/new-apartments/the-eveleigh-broadbeach-7-9-surf-parade-broadbeach-qld-4218">The Eveleigh</a> will deliver 100 apartments across 31 levels, making it the company’s largest Gold Coast project to date. It builds on the success of its three earlier developments, <a href="https://www.apartments.com.au/buildings/hemingway-1267-1273-gold-coast-highway-palm-beach">The Hemingway in Palm Beach</a> and <a href="https://www.apartments.com.au/buildings/emerson-kirra-100-musgrave-street-coolangatta">The Emerson at Kirra</a>, both completed, and <a href="https://www.apartments.com.au/new-apartments/yves-mermaid-beach-7-9-mermaid-avenue-mermaid-beach">Yves Mermaid Beach</a>, which is nearing completion.

[smartcode_project:default project_id=149670 project_image_fid=360966]

The announcement of The Eveleigh affirms the company’s sustained confidence in the Gold Coast market which continues to remain undersupplied. It also increases the value of Hirsch &amp; Fa​igen’s Gold Coast development portfolio to more than $700 million since the company first entered the market in 2021 with Hemingway.

The company has enlisted its preferred architecture firm Rothelowman to design The Eveleigh, which will offer a thoughtfully curated lifestyle, including a substantial wellness precinct, communal recreation areas, children’s play spaces, work-from-home facilities, and shared lounge and dining areas.

[smartcode_project:default project_id=149670 project_image_fid=360965]

Designed for the prime market demographic of downsizers and interstate lifestyle investors in mind, The Eveleigh has been crafted to offer an increasingly rare blend of affordable luxury in a tightly held market. Uniquely positioned in the heart of the Gold Coast’s most sought-after lifestyle suburb of Broadbeach, the project will also boast uninterrupted beach and hinterland views.

The Surf Parade site is just a short walk to the bustling Broadbeach dining and retail precinct, Pacific Fair, The Star Gold Coast and convention centre, and an easy stroll to Kurrawa Beach and the recreational amenity of Pratten Park on the Broadbeach foreshore.

[smartcode_project:default project_id=149670 project_image_fid=360975]

“We’re excited to be proceeding with our fourth project on the Gold Coast in what is certain to become the new luxury precinct in Broadbeach,” says Anthony Bueti, the CFO of Hirsch &amp;a​mp; Faigen and a shareholder of the group.

“With the likes of Mosa​ic and Abedian &amp;a​mp; Co also launching quality projects in the area, the transformation will cement Broadbeach as the premier lifestyle and amenity suburb on the Gold Coast.

"After four years in the Gold Coast market, and with three successful projects completed, The Eveleigh is the product of everything we have learned to love about the Gold Coast and it will be an incredible addition to our growing portfolio in one of the most vibrant property markets in the country. We continue to remain very confident in the high-end Gold Coast property market.”

Urban Activation Director Matt George is handling sales for The Eveleigh, having sold out The Emerson, The Hemingway, and Yves, all before construction was completed.

Melbourne builder MAXCON has already commenced construction on The Eveleigh. They are forecasting a mid-2028 completion.

[smartcode_project_cta:default project_id=149670]

Hirsch & Faigen unveils The Eveleigh in Broadbeach

Two years after securing development approval for the final stage of its award-winning Thornton Precinct on the doorstep of Penrith Station, Urban Property Group is set to launch <a href="https://www.apartments.com.au/new-apartments/mayfair-on-penrith-172-lord-sheffield-circuit-penrith-nsw-2750">Mayfair on Penrith</a>, around 400 apartments designed to reflect two of Sydney’s most iconic structures.

The builder-developer has continued refining the design plans for the two-building development on a significant 8,280 sqm site on Sheffield Circuit, recognising the importance of the prime parcel as one of the closest developable sites to the station.

UPG enlisted architecture firm SJB to design the project. The team said they drew inspiration from both the General Post Office in Martin Place and East Circular Quay to help shape the design. The two-level colonnade, in particular, reflects the famous GPO building, which dates back to the 1860s.

[smartcode_project:default project_id=136726 project_image_fid=362014]

There will be one-, two-, and three-bedroom apartments on offer, with interiors by Cox Architecture. Residences will sit above a retail podium featuring hospitality and lifestyle operators such as One Playground and Volcano’s Steakhouse, contributing to an activated ground plane within the broader Thornton precinct.

A communal rooftop with a pool and views towards the Blue Mountains will provide shared open space for residents. The development is positioned between Ron Mulock Oval and Westfield Penrith, with the Nepean River and Great River Walk also nearby, placing daily amenity and green space within walking distance.

&nbsp;

[smartcode_project:default project_id=136726 project_image_fid=362015]

Mayfair is being delivered by Urban Property Group, a family-owned developer and builder with nearly 40 years’ experience across Sydney. The project will be the first in Penrith to be offered with Resilience Insurance’s 10-year Latent Defects Insurance (LDI) policy, which Urban Property Group has adopted across a number of its recent developments. The developer also has a 4.5-star iCIRT rating, one of the best ratings in market providing further confidence to buyers.

Urban Property Group CEO Patrick Elias said providing additional assurance to off-the-plan buyers has become increasingly important.

“Anything we can do to give confidence in our product is a plus,” Elias told Apartments.com.au.

“Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. They’re making their single large investment, which is their home, and providing confidence is something that we feel is paramount.”

[smartcode_project:default project_id=136726 project_image_fid=362020]

The LDI policy provides a 10-year warranty covering structural defects, with independent inspections carried out during construction and protection for owners if defects arise post-completion.

Mayfair represents Urban Property Group’s sixth and final development within Thornton, consolidating the masterplanned precinct immediately east of the station.

The developer, which builds its own projects, has already commenced construction. SRM Residential is handling the sales campaign.

[smartcode_project_cta:default project_id=136726]

Urban Property Group to close the curtain on award-winning Thornton precinct with Mayfair on Penrith release

Currency

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EXPERT OBSERVER
There’s no trading strategy that will deliver better returns than chance.
In 2013 I wrote a <a href="https://theconversation.com/gambling-on-the-dollar-time-to-reign-in-forex-trading-21150" target="_blank">piece on The Conversation</a> arguing that foreign exchange trading should be much more tightly regulated.
In particular, I said that retail (mum and dad) investors should only be allowed to trade foreign currencies in limited circumstances. Since then there has been little change. It is still shockingly easy for a retail investor with a very limited understanding of foreign currency to trade foreign exchange, as was demonstrated on ABC 7.30 on <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/7.30/the-risky-world-of-online-foreign-exchange/10922394" target="_blank">Wednesday</a> and <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/7.30/the-opaque-world-of-foreign-exchange-trading/10927348" target="_blank">Thursday</a> nights.
There is a basic difference between foreign exchange trading and other forms of investment such as share trading. Over time, share markets tend to rise, so that if an investor buys a diversified basket of shares, or even an individual share, they should expect a positive return over time. Of course markets go up and down, and individual share trades can go wrong, but in the long run the market tends to rise.
<h2>Share trading it isn’t</h2>
Foreign currency markets are fundamentally different, in that there is no reason to expect exchange rates such as the Australian-US dollar rate to rise or fall over any short- or medium-term trading horizon.
For 30 or more years, academics have tried to build models to predict exchange rates. None of them work. If even the most sophisticated academic or trader built a model to predict whether the AUD/USD would go up or down tomorrow, they would get it wrong 50% of the time – exactly the same as a coin toss. This means trading foreign exchange on the basis of whether major currencies will go up or down is exactly the same as playing <a href="https://en.wikipedia.org/wiki/Two-up" target="_blank">two-up</a>!
<h2>Losses can exceed what you put in</h2>
The second reason that retail investors should be wary of foreign exchange trading is that many promoted products are highly leveraged - funded by borrowing. The Australian Securities and Investments Commission has <a href="https://www.moneysmart.gov.au/investing/complex-investments/foreign-exchange-trading" target="_blank">clear warnings about foreign exchange trading</a> on its Moneysmart webpage, including a case study of a typical trader who invests A$500 to borrow to buy A$100,000 at an exchange rate of 91 US cents.
With this contract, a fall in the USD/AUD exchange rate to 88.5 US cents sees this trader lose A$2,825, meaning they have to pay another A$2,325 in addition to the original A$500 to close out the contract.
<hr>
<a href="https://images.theconversation.com/files/265003/original/file-20190321-93057-1krimjl.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/265003/original/file-20190321-93057-1krimjl.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> How to lose a lot from a little. <a class="source" href="https://www.moneysmart.gov.au/investing/complex-investments/foreign-exchange-trading" target="_blank">ASIC MoneySmart</a>
<hr>
If foreign exchange trading is so risky, and in my view no different to playing two-up or roulette, why do we allow retail investors to leverage into these products?
The problem, as I see it, is that regulators can take one of two approaches to investors. The traditional view is that if investors have enough information they will make informed choices in their own best interests. Economists describe this as behaving rationally. The ASIC approach is very much based on this view: provide good information and let investors make informed choices.
<h2>Information isn’t enough</h2>
There is a second view that is gradually replacing this view of individuals as rational. The “behavioural economics” approach examines the psychology and actual approaches of individuals in different circumstances, to explore departures from rationality. Unsurprisingly, in many arenas people are irrational, creatures of habit, ill-informed, and so on.
An implication is that sometimes people ought to be protected from their own poor decisions, even though that might limit choice. I would argue strongly that there is no reason for retail investors to trade foreign exchange, and certainly no reason to borrow to do it. Measures to limit such trading, except in circumstances where an investor can demonstrate their expertise, ought to be encouraged.
<h2>We’re a magnet for promoters</h2>
This is very far from the case in Australia currently. In fact Australia is seen as an attractive location for firms offering retail foreign exchange trading. Websites offer “training and tips” and then allow trading inside 24 hours.
I have spent 30 years studying foreign exchange markets and would still say that I’m not sophisticated enough to trade them. Maybe I’m dumb, but I’m not crazy enough to trade foreign exchange.
<a href="https://theconversation.com/profiles/mark-crosby-444" target="_blank">Mark Crosby</a>, Professor, <a href="http://theconversation.com/institutions/monash-university-1065" target="_blank">Monash University</a>
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/no-better-than-roulette-how-foreign-exchange-trading-rips-off-mum-and-dad-investors-113743" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

No better than roulette. How foreign exchange trading rips off mum and dad investors

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GUEST OBSERVER
Some initial coin offerings seem like scams (and some are), but behavioural research shows our emotions are part of why people buy in to cryptocurrencies for fruits and vegetables or crypto trading even if cool-headed rationality screams at us not to.
An initial coin offering is just like an initial public offering. But, instead of shares, what’s being sold are cryptocurrency “coins” or “tokens”. These are similar to virtual currencies found in computer games, enabling you to buy goods or services within an ecosystem.
Around half of the initial coin offerings launched last year have already disappeared or failed. This has potentially cost investors hundreds of millions of dollars.
The boom in initial coin offerings is a textbook example of how our emotions drive us to be overly optimistic and to become fixated on the spectacular gains made by others. Companies and designers can also appeal to our emotions and our conceptions of ourselves by appearing to adopt moral positions.
This mix of emotions lets “irrational exuberance” over getting rich quick (while doing the world a favour) overwhelm our reason and willpower.
Early investors in initial coin offerings made an absolute killing, which led to a lot of media coverage of newly minted “crypto-billionaires”.
This is a recipe for creating what’s called “optimism bias” because people become fixated on the spectacular gains made by others, playing into a lust for wealth.
Comparing our meagre incomes to these huge profits also means, deep down, we become terribly afraid of losing our chance at riches, stimulating feelings of stress and what’s known as “loss aversion”.
<img src="https://images.theconversation.com/files/208214/original/file-20180228-36671-19yn96t.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
A bananacoin is pegged to the export price of one kilogram of bananas.
But even more striking in the boom of initial coin offerings is how many appear to be about some moral initiative, such as supporting sustainable energy, artists, veganism or organic bananas.
In other words, many initial coin offerings tap into a set of emotional impulses associated with morality.
Research in social psychology shows that morals are built on powerful emotions, not reasoning. Signals from our environment go through emotional centres of the brain not only before the reasoning centres, but even before our sensory centres – we “feel” even before we “see”.
Reasoning serves merely to justify emotional reactions. People will justify what they already want to do, or have done, after the fact.
We also know from other research that while reason does give us willpower to resist emotional temptation, it has only a finite capacity to do so and can be overwhelmed.
The moral aspect of initial coin offerings also taps into our conceptions of our own identities. My research shows that if I can find a way that my cryptocurrency (say a cryptocurrency for veganism) would allow you to live out your moral identity (being a vegan) then it’s much easier for me to get the idea into your mind that you should buy it.
Once such ideas are implanted into the mind, they are difficult to restrain.
When we lust for riches, fear being left behind and identify strongly with some moral cause all at once, reason and willpower don’t really stand a chance.
But simply regulating initial coin offerings is difficult. One of the first things you learn in economics is the “law of unintended consequences” – that regulation seldom does only what it was intended to do.
Regulations aimed at protecting individuals from themselves could restrict new technologies and discourage a necessary process – discovering what’s a stupid idea and what is a spectacularly good idea. The line between them is very fine indeed and almost never obvious.
<img src="https://counter.theconversation.com/content/92508/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Among all the crackpots and charlatans we might just discover a technology to educate girls in Africa, fund a breakthrough in clean energy technology, or help to stamp out human rights abuses across the world.
Brendan Markey-Towler, The University of Queensland.
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/why-we-put-money-into-bizarre-cryptocurrencies-like-ponzicoin-and-cryptokitties-92508" target="_blank">original article</a>.
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Why we put money into bizarre cryptocurrencies like ponzicoin and cryptokitties

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GUEST OBSERVER
The current international tax regime was developed in the last century when the internet was not yet invented.
At that time, a foreign company would typically require a substantial physical presence in Australia before it could be in a position to earn significant amount of income from Australian customers. This is what’s known in the tax world as permanent establishment.
The concept of permanent establishment is embedded in most domestic tax laws as well as virtually all the 3,000 plus tax treaties in the world. It dictates that in general, business profits of a foreign company will be subject to tax in Australia only if the company has a permanent establishment in Australia. In other words, the ATO cannot tax a foreign company’s profits if it has no permanent establishment in Australia.
The recent hearings of the Senate inquiry into corporate tax avoidance made it clear the tax structures of Uber, Airbnb, like their older peers Google and Microsoft, are designed to ensure income from Australian customers is earned by a foreign company that does not have a permanent establishment here. The permanent establishment concept is not effective for today’s digital economy.
<h2>Uber’s business and tax structure</h2>
Take Uber, which though established in the US, has a wholly-owned subsidiary in the Netherlands, which in turn has a wholly-owned subsidiary in Australia.
The most important asset of Uber is its digital platform that supports the app linking individual drivers and their customers. It’s unlikely this app was developed in the Netherlands. Despite this, Uber-Netherlands has the right to book income generated from customers in Australia.
For example, if a customer pays $100 for a ride in Sydney booked through the Uber app, the money is in fact paid to Uber-Netherlands. Out of the $100, Uber pays the driver about $75. The gross profit of $25 is booked in the Netherlands. This is so even though the transaction happens largely in Australia, including the driver, the customer and the ride.
Uber-Australia receives a service fee from Uber-Netherlands for its marketing and support services performed in Australia. The fee is determined based on the operating costs of Uber-Australia, plus a mark-up of 8.5%. The mark-up is effectively the taxable profit of Uber in Australia under its tax structure.
<h2>Airbnb’s business and tax structure</h2>
Airbnb, another young business founded in the US, has a structure very similar to that of Uber. Airbnb’s parent company in the US has a wholly-owned subsidiary in Ireland, which in turn has a wholly owned subsidiary in Australia.
Airbnb charges fees to both hosts and guests for accommodation booking through its digital platform. Instead of Airbnb-Australia, Airbnb-Ireland books the fee income generated from accommodation bookings in Australia. This is so even if the host, the guest and the accommodation are all in Australia. For example, if a Sydneysider uses the Airbnb app to book accommodation in Melbourne, the payment is in fact paid to Airbnb-Ireland. The host of the accommodation is then paid by Airbnb-Ireland which charges a fee of 3%.
Airbnb-Australia is responsible for the marketing activities in Australia. It receives a service fee from Airbnb-Ireland for those activities, and the fee is again computed based on its operating costs plus a mark-up.
<h2>Déjà vu – Google and Microsoft</h2>
Comparing the tax structures of Uber and Airbnb with that of Google and Microsoft reveals striking similarities. It suggests that the appetite for tax planning is comparable between established and relatively “young” technology companies.
The common pattern: a parent company in the US establishes wholly owned subsidiaries in market jurisdictions (such as Australia) as well as in low-tax countries.
While the commercial reality is that all companies in a group are effectively one single enterprise, the tax law in general treats each company as a separate taxpayer.
On one hand, the Australian subsidiary typically is responsible for marketing and support services that have to be physically done in Australia, and earns a service fee on a cost plus basis. The amount of profits subject to tax in Australia is usually very small compared to the income generated from Australian customers.
On the other hand, intellectual properties – which are often the most important and valuable assets of technology companies – are located in low-tax jurisdictions such as Ireland, the Netherlands and Singapore. This structure allows those low-tax subsidiaries to book the income generated from customers in Australia, and effectively shields the income from the Australian tax net.
<h2>Policy responses</h2>
Action item 1 of the OECD’s base erosion and profit shifting (“BEPS”) project is “tax challenges of digital economy”.
The original intention of the OECD was to explore how the 20th century international tax regime should be reformed in response to the digital economy in the 21st century. It quickly realised it was extremely difficult, if not impossible, to achieve international consensus on the intended reform. The often conflicting and vested interests among countries present a formidable obstacle to international consensus on meaningful reform of the international tax regime.
Instead of relying on the BEPS project to resolve the issue, Australia has followed the lead of the UK and is in the process of introducing the Multinational Anti-Avoidance Law – commonly known as the Google tax– to address the issue. As the new law incorporates concepts that are new and untested, it is not clear whether it will be effective.
In any case, it’s important to remember that multinational corporations are very agile. They may replace their “avoided permanent establishment” structures to circumvent any Google tax or to incorporate new tax avoidance tools.
 
Antony Ting is associate professor, University of Sydney and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/antony-ting-117958" target="_blank">here</a>.
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