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'Google tax' already being avoided, says Australian Tax Office

Big accountants felt to have helped tech companies under suspicion of new dodge

The Australian Taxation Office (ATO) has warned that the nation's attempts at imposing a "Google Tax" are already being circumvented, and suggested big accountancy firms have found a way around efforts to stymie multinational tax avoidance.

Australia's Google Tax, formally known as the Multinational Anti-Avoidance Law (MAAL), is modelled on the UK's and imposes penalties on companies that move money offshore for the sole purpose of legally-but-cynically avoiding tax.

The ATO yesterday issued two "Taxpayer Alerts," documents it releases to record "concerns about new or emerging higher-risk tax arrangements or issues that we have under risk assessment."

Taxpayer Alert 2016/11 says the ATO is working with multinationals that need to alter their affairs, but remains "concerned ... that some taxpayers are entering into artificial and contrived arrangements in attempts to avoid the application of the MAAL."

Indeed the Office says it's just found a new one it considers "artificial and contrived," as it "involves interposing an entity described as a partnership between the foreign entity originally making supplies to Australian customers, and the Australian customers."

"The partnership has one resident corporate partner with a minority interest in the partnership, therefore purporting to characterise the partnership as an 'Australian entity' for the purposes of the MAAL." But nothing changes in the business' actual operations, and the ATO says: "The arrangements have little, if any, commercial basis."

Alert 2016/10 signals a probe into "robin-type arrangements that involve funding of an overseas entity or operations by an Australian entity, where the funds are subsequently provided back to the Australian entity or its Australian associate in a manner which purportedly generates Australian tax deductions while not generating corresponding Australian assessable income."

The Australian Financial Review reports that senior ATO officials learned of one of the schemes described above in a chat with a major accountancy practice that is restructuring the affairs of known MAAL-feasants. Big accounting firms are often global or have tentacles in many nations: The Register suspects the schemes the ATO worries about will be known to accountants in other lands.

There's no hint in the Financial Review or the ATO's alerts that big tech companies are the source of these new tax dodge attempts. But we know the likes of Apple, Microsoft, Amazon, eBay and Google have form. It would not be surprising if their names appear in future despatches. ®

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