Budget 2015 brings new taxes to the tech world

Australia is about to see a crackdown on taxes for technology under a number of new measures introduced by Treasurer Joe Hockey in the 2015 Budget.

Mr Hockey insisted he was focused less on introducing new taxes on consumers, and getting "people or companies who are avoiding their tax to pay their fair share." However, the new measures will mean price rises for Australians when they're buying digital products online.

In introducing legislation to broaden the scope of the GST, Mr Hockey said the Government's main focus was "fairness" in the taxation system.

"A local business that employs Australians, pays rent in Australia, pays tax in Australia, and helps build our economy is disadvantaged by the current system," he said. "We will level the playing field for Australian businesses by mandating that foreign businesses supplying digital products and services are subject to the GST."

Subject to unanimous agreement from states and territories and the passage of legislation, the GST will be charged from July 1, 2017 and is estimated to bring in AU$350 million within 2 years. From then, Australians will see a 10 percent hike in prices across the board on products from across the border.

But the Treasurer wasn't just setting his sights on tax increases for smaller purchases. Alongside the new GST measures, Mr Hockey confirmed that the Tax Office would be cracking down on multinational tax avoidance, potentially hitting major international tech companies with bigger tax bills.

"Everyday Australians rightly believe that if a dollar of profit is earned here, then you should pay tax here. Unfortunately this is not always the case for some multinationals. Many have the capacity to aggressively minimise their tax," he said.

"Under this new law, when we catch companies cheating, they will have to pay back double what they owe, plus interest."

The new laws will apply to companies with global revenues of AU$1 billion or more from January 1, 2016 and will apply to both new and existing tax schemes.

The changes come off the back of Australian Taxation Office investigations that saw ATO agents embedded within a number of multinational companies and the identification of "30 large multinational companies that may have diverted profits away from Australia to avoid paying their fair share of tax in Australia."

Finally, in a blow for Australia's telcos and ISPs, the Attorney-General's Department has confirmed it will provide AU$131.3 million over 3 years under the Budget to help the telecommunications industry with the costs of meeting their obligations under new data retention laws. However, this figure is significantly below earlier expectations.

Modelling completed by PricewaterhouseCoopers estimated that the set-up costs of a data retention scheme would range between AU$188 million and AU$319 million. While Attorney-General George Brandis previously stated the Government would make a "substantial contribution" to these any costs, he noted that the telecommunications industry was worth AU$43 billion a year and that any cost to the industry would be negligible.