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Australia Tax Issue with Adsense

     
7:17 am on Jul 15, 2008 (gmt 0)

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I opened my letter box and was told to pay AUD$30K for GST.

I serve 150 millions impressions monthly with only around 5 millions are traffics coming from Australia (based on google analytics).

The tax office said, they sample my website and there are around 30% advertisements are coming from Australia.

How could the sample be accurate, if they do not get the correct data from google?

This is nuts.

Woz

7:37 am on July 15, 2008 (gmt 0)

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>around 30% advertisements are coming from Australia.

Of course they would see a large proportion of Aussie ads - they are in Australia and therefore have an Australia IP!

Either they haven't really thought this through very well, or they just don't understand the online advertising business. Perhaps you could provide a more detailed explanation as to your traffic sources with backup evidence from your server logs and Adsense statistics.

For example, based on your figures above Aussie traffic is only 3% or so. For the 97% of non-Aussie traffic the amount of Aussie ads being served would be negligible, and if they are seeing 30% Aussie ads from Australia, then the total of Aussie ads served globally would be way less than one percent. Then, multiply that by your Click Through Rate and the amount of Revenue from Australia for GST purpose would be, um, not very much at all.

Onya
Woz

8:11 am on July 15, 2008 (gmt 0)

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Of course they wont understand online advertisement. they must be those doll idiots employed for the sake of reducing unemployment rate.
8:24 am on July 15, 2008 (gmt 0)

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I think you will find they are entirely incorrect. Adsense advertisements always come from the USA - just do a nslookup on pagead2.googlesyndication.com and you will be swiftly pointed to the states.

Australian companies may have made purchases from Google's Australian sales office, however your dealings have been exclusively with Google's US offices. Google US may have chosen to 'export' to you adverts which it has previously 'imported' from Australia; but the fact that they are served from Google in the US and you get paid by Google in the US should clearly show that you have no financial dealings with either Google's Australian office or the original advertisers wherever they are.

Important question: Are you entitled to make a back-dated claim for GST from Google, as if it was due it should have been paid by them?

My opinion only of course

Woz

9:02 am on July 15, 2008 (gmt 0)

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>you get paid by Google in the US

Of course, silly me. As Adsense Publishers we are dealing with, and paid by, a US company, hence GST does not apply.

Mind you, I am no tax expert so it would be wise to consult one.

Even so, their expectation based on their figures and assumptions do make one shakes one's head.

Onya
Woz

9:56 am on July 15, 2008 (gmt 0)

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As Adsense Publishers we are dealing with, and paid by, a US company, hence GST does not apply.

(wiping sweat from forehead)

Yep, that was my impression, too. I'm in Europe, and I am exporting advertisements to the U.S.; the "contract" is with Google, Inc., in Mountain View, CA, USA. Thus they are not applicable for VAT [or "GST" in Australia].

Then again, maybe things are different in Australia?

Yolkman, where do you live? Australia?

1:31 pm on July 15, 2008 (gmt 0)

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How did they find out about this? I might just have to get on a plane very soon ;)
6:31 am on July 16, 2008 (gmt 0)

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I spoke to my account about this issue, for adsense and ebay and at the end of a 1 hour conversation he decided that GST does not apply because the payment comes from outside of Australia. For example I work for "Google or Ebay" and as such my relationship is with them not the person who clicks on the ads.

He also advised that we could apply for a ruling however. If GST applies to ebay and adsense income from Australian clicks then I might as well pull my AU sites and focus on US.

7:49 am on July 16, 2008 (gmt 0)

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bts,

I am incorporated in Australia.

kidder,

I have just faxed my Rejection Letter. This is absolutely non-sense. I dont mind paying the real GST amount, if they can get the correct data from Google.

7:53 am on July 16, 2008 (gmt 0)

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GST does not apply because the payment comes from outside of Australia. For example I work for "Google or Ebay" and as such my relationship is with them not the person who clicks on the ads.

I'm inclined to agree. Afterall, Google is importing our services, is it not? We do list it as a G3 item on the BAS statement as it is considered (revenue obtained GST free including imports)

I'm guessing here: In addition, if your hosting server is located offshore, then that would also make it a weaker case for the ATO.

[edited by: Scurramunga at 7:54 am (utc) on July 16, 2008]

8:03 am on July 16, 2008 (gmt 0)

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I can't see how the ATO could possibly have any kind of a solid footing here.

You're dealings are with Google/eBay etc -- not with the punters who click on the ads -- regardless of where they may be.

[edited for typo]

[edited by: stuartmcdonald at 8:04 am (utc) on July 16, 2008]

8:04 am on July 16, 2008 (gmt 0)

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I don't think you need to aportion any GST component - Does the tax office allow you to claim GST on say adwords costs for example. I think not. This stuff makes my blood boil, it's bad enough we have an idiot in charge of the country, who needs to be paying taxes to the states as well.