trumble - 10:17 pm on Nov 20, 2003 (gmt 0)

Tax problems with the US - I'm posting this from Australia but I wonder if the UK and other countries have similar issues..

I developed and run a site here in Australia that uses American servers (bandwidth here is ridiculously expensive) and most of my income comes from Google Adsense.

Now Google comes along and says it will withhold cash unless I put in some forms with the IRS. I saw my accountant about it and he has some concerns about it. Even though I can be exempt from withholding and the US and Australia have a tax treaty and the Australians will generally reimburse the amount I pay to the Americans, there are problems.

Firstly it seems there's little point minimising tax in one jurisdiction and not another, because (if I understood him correctly) I wouldn't be able to claim more credit here than I pay here. This means, if I want to minimise tax, I've got to get a US accountant to do more than just adapt my Australian tax statement.

Secondly, and more worringly, it may be that when I want to take profit out of my company in the form of dividents, I'll end up paying 67c in the dollar! In Australia the highest marginal rate is about 48c and company tax is about 30c. The problem arises because Australia doesn't recognise tax credits from paying US tax when it comes to paying dividends - they become unfranked again.

Suddenly Adsense is not looking like a good deal at all. But my accountant and I would love to know what other people are doing.