ATO in stand-off with US tech giants over transaction dispute [Video]

The Australian Taxation Office is in a stand-off with the US trade agencies and tech giants over plans to tax billions of dollars’ worth of software transactions for the first time – a move that the US Treasury has warned could trigger a treaty dispute between the two countries.

The issue arose because software is no longer sold in a box with manuals – the transaction is now all digital. As a result, the Tax Office has been developing a new ruling on payments for software, focusing on what it sees as the substance of what consumers pay for: intellectual property.

The problem for foreign tech groups is that this means a …