Google Australia cracks $3 billion revenue

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Google Australia cracks $3 billion revenue

Google Australia generated more than $3 billion in revenue in the 2017 financial year, but officially tabled just a third of that due to accounting practices associated with it being a local reseller of the US-based search giant. 

In documents lodged with corporate regulator ASIC, the global search giant reported revenues of $1.02 billion for the year ending 31 December 2017, earning a pre-tax profit of $148 million on which it paid tax of $23.5 million.

However, the company also noted that it reported advertising “and other” sales net of reseller expenses, and revealed that gross advertising sales for the period were $3.06 billion, with a reseller expense of $2.44 billion. CRN understands most of the reseller expense is paid to Google’s US parent company Alphabet and not taxed by the Australian Taxation Office.

The company said Australian accounting standard AASB 115 required it to report advertising revenue on a net basis, but that it had included the gross Australian revenue voluntarily following requests for more transparency.

Google Australia’s 2017 reported net revenue actually fell almost $120 million compared to the prior financial year, when the company posted net revenue of $1.41 billion.

In 2017, Google Australia’s revenue comprised $604 million net revenue from advertising, $266 million in research and development revenue and $17 million from other sources.

Due to the company’s higher cost of sales in 2016, Google Australia turned a higher profit in 2017, reporting $125 million after tax, compared to 2016’s $104 million.

A Google spokesperson told CRN the company had invested more than $500 million in its Australian operations and currently employed more than 1300 staff in the country, about half of whom were engineers.

Taxation has been a key issue surrounding giant multinational tech companies operating in Australia, including Google, for some time.

Microsoft, Apple and Google were hauled in front of a senate committee investigating tax minimisation strategies in 2015, where Microsoft vice president of worldwide tax Bill Sample admitted most of the company's Australian revenue was booked by an affiliate business in Singapore.

On 1 January 2016, the federal government's multinational tax avoidance law (MAAL) came into effect, which gives the ATO additional powers to ensure global companies return their sales to Australia.

Google has since restructured its tax reporting following new laws being handed down that meant companies with a global revenue of more than $1 billion could be hit with fines or additional taxes if found to be offshoring profits.

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