Google Australia paid over $100m in taxes in 2019, settling its bill with the ATO
Google Australia handed $133m to the Australian Taxation Office (ATO) in 2019 as it caught up with back taxes following a pledge by the government to get multinational companies paying more tax.
In documents filed on Thursday, the company reported a profit before tax of $134m in 2019, a drop from $156m the previous year. However, Google also reported a 16% increase in advertising revenue for the period, pocketing $4.3bn from local advertisers.
Total revenue grew from $4.2bn to $4.8bn and net revenue from $1.07bn to $1.2bn.
Google Australia has been one of the ATO’s most high-profile targets, alongside Facebook, after reporting lower figures and paying minimal tax in the years to 2015. In 2019 the company was handed a $59m tax bill and a $50m ‘tax adjustment’ for the previous years.
Since 2017 Google Australia has paid over $450m to the ATO.
Google’s settling of its accounts come as the Federal Government fights to make Australia the first country to force the tech giants to pay for news. The Australian Competition and Consumer Commission (ACCC) has been tasked to create a mandatory code for Google and Facebook which will see publishers paid for the clicks they deliver via news.
Google Australia’s managing director, Mel Silva, hit back against the idea, saying in a blog post that the snippets of articles Google displays in search results were similar to posters outside newsagents.
“In the offline print world, publishers have long paid retailers, newsstands and kiosks to distribute their newspapers and magazines – acknowledging the value of acquiring audiences to a publishers’ content and the advertising publishers sell alongside it,” said Silva.
“In contrast, Google Search sends readers from Australia and all over the world to the publishers’ sites for free – helping them to generate advertising revenues from those audiences and convert them into paying subscribers. The traffic we send has substantial value.”
Nine chairman Peter Costello told the Australian Financial Review (AFR) that he would expect the platforms to pay $600m to publishers a year under the new code.
“If anyone wants to negotiate with Facebook and Google, they can – we’re not against that – but the best way of addressing this problem would be an industry solution, where you sit down and try to estimate the value that Google and Facebook are getting from the use of this material. We think it’s $600 million a year,” said Costello.
His comments were echoed by News Corp Australia boss Michael Miller, but he said the bill should be higher.
“While Mr Costello estimates that the platforms should pay Australian media companies around $600m per annum there are different approaches to negotiating with them,” Miller told The Australian.
“Our modelling suggests the figure is much higher than $600m and former senator Nick Xenophon, whose advocacy sparked the ACCC inquiry into the platforms, has nominated $1bn.”
Google paid $59m on $4.8bn of revenue – 1.23%
Does that seem right to you?
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Can someone explain profit of $134m against gross revenues of $4.8bn and net revenues of $1.2bn? This doesn’t seems to stack up for me? What are Google’s Australian costs and why is the profit before tax so small? I’m guessing there is transfer pricing in here somewhere but if anyone has insight on this please do share.
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Perhaps worth noting here that all of the current government support for many in our industry and others comes from TAX.
TAX pays for hospitals and bailouts and support for parents and children and the sick.
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Google it.
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Revenue is not net profit
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Tax is paid on profit, not revenue. Woolworths paid $668M in tax on $60Bn I’m revenue in 2019, that’s ~1%.
Real question is calculation of profit and what rests in Australia. Google (and the US government) would argue that almost if the profit should sit where the investment and risk sits in the US. Similar to BHP, should the profit sit in Australia where mining investment and risk sits, or in China where the product is sold.
Can’t have it both ways.
Not saying Google shouldn’t pay more tax, but bullshit, factually inaccurate comparisons need to stay confined to NewsCorp papers.
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Google has no costs in Australia relating to their ad platform. No local support agents, no reps, not really any unique local infrastructure at all. It’s just the regional arm of a global platform. God knows how they’ve cobbled these numbers together as far as the cost side goes.
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actually – they HAVE done some local advertising, no trouble accruing those costs locally, but I reckon that’s about it …
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Tax is payable on profit not revenue.
Which is why you too are entitled to make tax deductions.
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Google has loads of reps, support agents and so on in Australia, they even have engineers working on the product in this country.
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I might be a bit thick but seems to me that tax on revenue might be a more sensible system than tax on profit. Easier to track by country so might remove a lot of the dodging and put renewed focus on keeping costs low rather than reporting them high?
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