Microsoft Australia makes AU$43m profit after settling AU$39m ATO bill

Microsoft has made its financial results for the 12 months to June 30, 2017, available to the Australian Securities and Investments Commission (ASIC), reporting AU$43.1 million in after-tax profit, down from the AU$55.9 million recorded in 2016.

The local arm of the tech giant recorded AU$1.48 billion in revenue, which was up from the AU$719 million generated a year prior. Sales of goods and services provided Microsoft with AU$1 billion during the year.

According to the company's ASIC filing, the principal activity of Microsoft in Australia is the marketing of computer software, peripherals, and video game consoles, and from February 2017, the principal activity extended to include the licensing and distribution of computer software, peripherals, and hardware.

"The company now transacts directly with customers in the Australia market, and records revenue and related costs from the volume licensing, online (business to consumer), Microsoft business solutions, and hardware product lines of business," the report explains.

For the 12-month period, Microsoft Australia paid AU$87.3 million in tax, more than double the AU$36 million it paid last year.

During the year, the company entered into a memorandum of understanding with the Australian Taxation Office (ATO) with respect to the income tax periods spanning July 1, 2010, to June 30, 2022. Included in that agreement was the resolution of the audit matters for the period covering July 1, 2010, to June 30, 2013, which saw Microsoft hand over AU$39 million in previously unpaid tax, recorded as its "final deed of settlement".

Microsoft, alongside the local arms of Apple, Google, and Samsung Electronics, had their Australian income for the 2015-16 financial year published by the ATO, with the 2015-16 Report of Entity Tax Information revealing last month that the multinationals are paying the appropriate amount of tax.

The Australian government legislated a new Diverted Profits Tax (DPT) in March, which is intended to prevent the practice of multinational organisations shifting profits made in Australia offshore to avoid paying tax.

The DPT will hit multinationals with global revenue of more than AU$1 billion and Australian revenue of greater than AU$25 million with a 40 percent tax on all profits.

The new tax is expected to see AU$100 million in revenue per year -- from 2018-19 -- stay on Australian soil.

The new legislation mirrors laws implemented in the United Kingdom, nicknamed the Google Tax after the search engine giant was ordered to pay the UK government £130 million in back taxes.

While no information was provided on Microsoft's other Australian-registered business entities in its ASIC filing, Microsoft Datacenter (Australia) generated AU$102.4 million in income during the 2015-16 financial year, and paid AU$6.8 million in tax, according to the ATO.

For the three months to September 30, 2017, Microsoft Corporation recorded $6.6 billion in net income from $24.5 billion in revenue.

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