ATO ruling could treat tech payments as royalties, raising Apple and Google's
An ATO ruling says cross-border software payments are royalties. This means Australian withholding tax applies.
A new Australian Taxation Office ruling could increase tax collected from Apple, Google, Microsoft and Amazon. The ruling changes how their payments to overseas companies are treated.
Normally, when an Australian branch pays an overseas parent for software rights, it's a business expense. The new ruling says some of this payment may be a royalty for intellectual property.
This triggers Australian withholding tax. Last year, three tech groups reported almost $30 billion in income.
Apple, Microsoft and Amazon paid about $478 million in tax. Extra taxes from this ruling could amount to hundreds of millions across major tech firms.
The US Treasury objected during the consultation. They urged the ATO to withdraw or revise the ruling.
They wanted it to align with international tax rules.
- A$30 billion (Apple, Microsoft, Amazon)
- Combined income
- A$478 million
- Combined tax paid
- Apple, Google, Microsoft, Amazon
- Scope
Why it mattersIf the ruling stands, multinationals must pay more tax. The tax applies to profits from Australian consumers. Companies can't shift them offshore.
AustraliaAustralian tax revenue from tech giants could increase substantially; consumers may face higher software subscription prices if companies pass costs through.
Corroborated bytheconversation.com
✓ Claims checked against the source. checked 8 d ago
