Global tech giant Microsoft has made an undisclosed settlement with Australian Taxation Office which ended the audit process on the company. According to rumours the settlement could run to hundreds of millions of dollars. Details of the settlement can only be disclosed to a committee through a confidential submission so as not to affect corporate competitors.
Microsoft, Rio Tinto, BHP Billiton, Apple and Google were among the 7 publicly listed companies that were hit by ATO with tax bills that range from $250 million to $800 million after undergoing an extensive audit process. It was understood that these companies were targeted to be able to recoup nearly $3 billion in taxes that were owed by multinationals. Microsoft has no Formal Pricing Agreement with ATO but it has agreed on a certain amount that Microsoft may earn and the income tax payable until 2022.
Early this year, Rio Tinto confirmed that ATO has issued the company with amended tax assessments that required the payment of an extra $447 million. On the other hand, Apple’s managing director Tony King revealed that ATO had completed a five-year audit on the company and no penalty was imposed. Apple’s taxes were up-to-date and it has made a commitment with ATO that they will be informed of any changes in the future.
Google and Facebook are also facing an inquiry to determine whether the companies are guilty of tax avoidance and minimization of multinationals operating in Australia. The inquiry is running simultaneously with ATO’s audits into 50 multinational corporations to make sure they are complying with Australian tax laws.
New laws are targeting multinational tax avoidance but it does not have any impact on Apple’s straightforward business model. The company has religiously recorded all of its local transactions and revenues and has complied with the Australian tax laws.
An individual or business can expect a random tax audit at any time in the future and the best option is CRA audit protection from the considerable amount that can be spent during the audit activity. Audit insurance will cover the professional accounting fees in insuring that the business is in compliance with the regulations of the tax revenue office.