Google pays $500 million to settle Australian Taxation Office case

Google has made a whopping payment to settle a long-running dispute with the Australian Taxation Office with the outcome being described as a “great outcome.”

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In what is believed to be the largest-ever back payment by an ecommerce company in Australia, Google has forked over nearly half a billion dollars to settle a long-running dispute with the Taxation Office.

“This settlement is another great outcome for the Australian tax system,” ATO deputy commissioner Mark Konza said.

“It adds to the significant success of the ATO in positively changing the behaviour of digital taxpayers and significantly increasing the tax they pay in Australia.”

The $481.5 million paid by Google brings the increased collections from the eCommerce industry by the Tax Avoidance Taskforce to about $1.25 billion, following earlier deals with Microsoft, Apple and Facebook.

Each of those was less than $100 million.

A Google spokeswoman said “we have reached a $481.5 million settlement with the ATO that resolves the longstanding dispute and audit covering 2008 to 2018. The settlement will also provide certainty in relation to future tax treatment.”

The bill had already been reflected in Google’s consolidated financial results and involves no admission of liability.

The “certainty” referred to by Google is likely to mean having to pay a higher rate of tax in Australia from here on, experts said.

To date the rate has been very low.

Google Australia’s most recent financial statements, published in April, showed the Sydney-based company had “gross billings” of $4.2 billion in calendar 2018.

But the vast majority of that was sent to a sister company in low-taxing Singapore, because Google Australia has been operating as a mere “reseller” of advertising and other services.

Consequently Google Australia paid just $26.5 million in tax last financial year.

Treasurer Josh Frydenberg said the Google settlement was “strong evidence that the Coalition Government’s tax avoidance taskforce and tough laws are working to ensure that all taxpayers pay the right amount of tax.

“The ATO has been resolute in tackling tax avoidance and holding multinationals and large companies to account,” Mr Frydenberg said.

“Ensuring large companies and multinationals pay their fair share of tax means we can continue to deliver the essential services Australians rely on.”

The Tax Avoidance Taskforce got a funding boost in this year’s Budget, which means its work can continue until 2023.

Mr Konza said the extension “will ensure that the ATO is able to continue to pursue these issues and provide assurance to the community that we are doing everything in our power to protect Australia’s tax base”.