Google Australia's tax bill doubled last year -- and the ATO is still chasing them

Photo: Justin Sullivan/ Getty Images.

Internet conglomerate Google has more than doubled its Australian revenue and profit, resulting in a doubling of its local tax bill, after the so-called ‘Google Tax’ was brought in January last year.

The financial results for Google Australia, filed on Friday, show revenue of $1.141 billion for the calendar year to December 31, 2016, compared to $498 million for the previous year.

Similarly, net profit more than doubled to $104.7 million after the company made $47 million in 2015.

The Multinational Anti-Avoidance Law, colloquially known as the “Google Tax”, became active in January 2016 to stop multinational companies shifting Australian revenue overseas to minimise local tax obligations.

The boost in revenue led to a tax bill for Google Australia of $32.9 million for 2016, more than twice the previous year’s $16 million liability. However, after accounting adjustments for deferred tax, the figure recorded in the profit and loss statement was $16.6 million.

Google Australia’s filing acknowledged the new laws forced contributed towards the large boost in revenue.

“During the financial year, the company restructured its business such that it recognised revenue from the selling of certain services and products to Australian-based customers,” Google Australia director John Howell said.

“The revenue increase is mainly attributable to the restructure of the company from a service entity to a reseller and service entity.”

He added that the 2016 results included marketing and sales for search engine and online advertising services – revenue that had previously been posted elsewhere.

“Previously, the company undertook marketing and sales support activities on behalf of a related entity and earned as service fee.”

Despite this, Business Insider understands Google Australia’s restructure was not fully completed in 2016 and that this year’s numbers would be a better reflection of the full impact of the new laws – meaning the 2017 results could see an even bigger boost in reported Australian revenue and tax paid.

A Google Australia spokesperson said that the company had also grown significantly during 2016.

“We invested more than $400 million in our Australian operations, and our workforce grew to around 1,300 people,” the spokesperson said.

The taxman is after Google Australia

Google Australia’s result is a stark contrast to Apple Australia’s fortunes, where net profit for 2016 plunged 97% due to a tax “adjustment” for previous years.

However, like Apple, Google is reporting increased scrutiny from the Australian Taxation Office. The ATO had issued an amended income tax assessment after the year’s end, a measure Google Australia will resist.

“The company will lodge an objection and make a payment to the commissioner of taxation to stay recovery action,” the filing said.

The latest report was the first time Google broke down its Australian revenue into different activities.

Advertising revenue was the biggest contributor, chipping in $882m; research & development services brought in $220 million; while $39.6 million came from “other sources”, understood to include hardware.

Google Australia also claimed $5.1 million of research & development tax incentive.

In 2015, the Australian government announced it would closely monitor the behaviour of multinationals offshoring income. A senate enquiry that year saw Apple, Microsoft and Google executives called up to explain their practices, while then-treasurer Joe Hockey said the ATO had a target list of 30 companies to audit.

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