Australian Taxation Office issues new ruling targeting big tech

The Australian Taxation Office (ATO) has issued a new ruling that could increase tax revenue from global technology giants. While previous laws targeted profit shifting and tax avoidance, this new approach focuses on the character of cross-border payments made to overseas entities within the same corporate group.

The ruling stipulates that certain payments for software can be classified as royalties, making them taxable in Australia. This shift addresses how multinational companies, such as Apple, Microsoft, Amazon, and Google, manage revenue earned from Australian consumers that is often recognized in offshore locations.

Transparency data from the 2023-24 income year highlights the scale of these operations. Apple, Microsoft, and Amazon reported a combined total income of nearly A$30 billion in Australia, while their combined tax payable was approximately $478 million.