Malcolm Turnbull proposes taxing Google and Facebook ads Australia's Communications minister Malcolm Turnbull has his eye on the revenues collected by multinational online ad platforms like Google. Apparently raising a white flag on the government stopping multinationals from shipping profits offshore to avoid tax, Turnbull has floated the idea of levying Australia's goods and …
If estimates of the advertising booked with Internet multinationals at AU$2.4 billion are accurate, they'd be asked to charge 4240 million in GST – however, much of this would be deducted by those booking the advertisements as an input cost, so the net to government would probably be far less.
Wouldn't the net revenue to the Federal Government be (very approximately) zero? Even if Google et al submit their BAS correctly, GST revenue all flows to state governments.
Nah, ask Mr Worstall, VAT/GST etc are pretty good at collecting their dues. As provider of the service Google would simply have to collect it and hand it over. It's not like corporation tax that can be avoided by some accounting trickery, and a few well chosen nameplate-only offices, hence the idea. Avoiding corporation tax is a game, avoiding GST is fraud.
Unlikely to raise anything at all, as I would assume that 99% of advertisers are GST registered businesses, and will claim all of it back.
Since it doesn't cost the advertisers anything at all, it won't level the playing field or in fact affect Google either.
So it must be a stalking horse.
First introduce GST on a cross border business that affects no one - so there is no backlash.
Second expand it to consumer purchases ie Amazon - cos Google didn't complain right?
In one word, no.
First, the percentage of advertisers able to claim back their GST component is much smaller than your 99% estimate.
Secondly, there is usually a lag between the payment of GST on a supply and the refund of that GST via a periodic income statement. Depending on the frequency with which the GST payment is rendered by the supplier as opposed to the frequency with which the purchaser claims a GST refund via a periodic income statement, that money can sit in the ATO coffers for a considerable time, where it is (of course) used to generate interest. As I recall, large companies reconcile their GST obligations monthly, where smaller organisations do it only four times a year. So that alone adds up to enough income to be worth having.
Isn't one of the things the UK government are up in arms about, is that Google book the ads from UK clients in their Ireland office, not the UK office, therefore they haven't sold anything in the UK, which basically would happen for Australia too.
To: ATO
From: Google Finance.
we did not sell any advertising through our Australian offices this year, so bugger off.
Have a nice day losers!
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