Adsense Income & Tax issues in Australia

More Web sites than ever are carrying text-based ads to make money. Sponsored links such as those provided by Google AdSense are more effective and less obtrusive than graphical banners. Although AdSense is a US-based program, it’s available to Australian Web site owners too.

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AdSense uses Google’s search technology to spider your pages, looking for keywords and other patterns, and then matches them with appropriate advertising messages. Ads are also geotargeted to match country and language. Every time an interested visitor clicks an ad, a few cents are credited to your account.
Experience shows that these text-based ads are very successful. Graphical banners have an average success rate of around 1%, but text ads can be five times more effective. This is good news for Webmasters and advertisers alike.

Before signing up with AdSense, it’s a good idea to do some research. Technically, selling ad exposure to Google is classed as exporting, so it would be wise to talk to your accountant or bookkeeper about receiving a new source of foreign, non-GST income.

Secondly, objectively weigh up the prospects of making money from your site. Google sends cheques every month to affiliates racking up more than US$100 in ad sales, but this requires roughly 1,500 to 3,000 visits per day to achieve. It’s possible to run with less traffic and get paid less frequently, but you need to consider whether the added page clutter is really worth it.

The excerpt above was quoted from an APC Mag article “Turning Web site traffic into cash with Google Adsense” which isn’t online anymore.

If you’re interested in earning money by blogging I recommend you read my article: How I Earn Lots Of Money By Blogging

10 thoughts on “Adsense Income & Tax issues in Australia”

  1. Good article. With the growth in Adsense and online incomes it is only a matter of time before tax offices worldwide start looking into people’s lifestyles and declared incomes.

  2. Is exporting income tax treated differently? I mean you are bringing in money into this country straightening the economy. Does the tax office give you a pat on the back saying good job, there’s 50% towards a deduction on that income, you are an Australian hero.

    Is this income taxed the same as normal Australian income?

    There is not much information about about foreign income made from the internet. The tax office doesn’t even know, believe me. Its very grey

    EDITOR: Nice try 🙂

    That ATO definitely wants to know about any Adsense income higher than “hobby” level (few $100/year).

    The only large deduction you may qualify for is the 25% entrepreneurs’ tax offset. To get that you have to be running a small business and satisfy various conditions which your accountant can tell you about

  3. Thank you Editor,

    We can only dream that it could be that way. It should be.

    Businesses that export services and goods overseas should be given a special tax treatment.
    They should be praised for adding to the economy of Australia.

    There are no incentives to do well in business in this Country. Do well = more tax surplus for the government, more of an excuse to make babies and get paid by the government.

    Why Do I even bother to do well in business, when I can join the rest and let someone else foot the bill.

  4. Shaded issues are finalised at Electronic Commerce Industry Partnership Minutes – Meeting 6 – 10 August 2000

    Is there an update on this from the ATO?

    EDITOR:
    You’re right. In that document the topic “How are ‘click-through’ advertising payment treated?” is not marked as finalised

    I suggest calling the ATO Business tax enquiries line on 13 28 66 to ask because the ATO website is really hard to search and i don’t have time to do it myself today.

    I’d appreciate it if you could post the results of your phone inquiry on this page.

  5. Ah mate, I called them before and as I mentioned they don’t know themselves. You need to get into contact with specialists at the tax office concerning this issue. The 13 28 66 is a call centre and the staff is not trained on this issues. I will give it a go and call that number again and see what that say.

    I am particular interested in Electronic Commerce Industry Partnership Minutes – Meeting 6 – 10 August 2000. We need to be clear on taxation and the internet. What was the outcome from this minutes. Where is the taxation law on ecommerce finalised in Australia.

  6. Here a more detailed doc.

    Electronic Commerce Industry Partnership – Issues Register

    Okay I called them, the best answer was to get a private ruling as suggested by them. As you mentioned earlier adsense is not subjected to GST.

    __________________________________________________

    Supply to non-resident outside Australia

    A supply that is made to a non-resident who is not in Australia when the thing supplied is done, and:

    aa. the supply is neither a supply of work physically performed on goods situated in Australia when the work is done nor a supply directly connected with real property situated in Australia; or

    bb. the non-resident acquires the thing in carrying on the non-resident’s enterprise, but is not registered or required to be registered.

    In this situation both limbs of subsection 38-190(1) item 2 are satisfied, as the supply is not being performed on goods in Australia or connected with real property in Australia, and the non-resident is not registered or required to be registered. Section 8 of A New Tax System (Australian Business Number) Act 1999 (the ABN Act) details the conditions under which an enterprise will be registered:

    Are you entitled to an ABN?

    1. You are entitled to have an Australian Business Number (ABN) if;

    cc. you are carrying on an enterprise in Australia; or

    dd. in the course or furtherance of carrying on an enterprise, you make supplies that are connected with Australia.

    Neither parts of section 8 of the ABN Act are satisfied in this instance as the supply (of advertising) is not being made by the non-resident but by the resident enterprise.

    The supply is therefore GST free under subsection 38-190(1) item 2.

    ____________________________________

    SO does this means you don’t need an ABN for foreign income obtained through the internet as far as the advertisers and vistors to your site are outside Australia?

    So do we pay tax on it?

    EDITOR: I think that any Australian who earns an income from Adsense should get an ABN since:

    * Getting an ABN costs nothing
    * It opens the door to selling advertising to Australian companies as well
    * It allows you to get business bank accounts, phone lines etc
    * You don’t need to register for GST anyway until your business has an annual turnover of $75 000+

    Also you do have to pay tax on the Adsense + other advertising income … there’s no way of getting around it

  7. DOH…

    I spoke to someone at the tax office and they never heard of “exporting income” from online advertising. They didn’t know what I was talking about.

    Editor, can you please point us where in the tax legislation on the ATO site we can refer to “Technically, selling ad exposure to Google is classed as exporting”

    Homer

  8. I’m about to publish a site and hopefully earn some money through AdSense. I have applied for an ABN as a Sole Trader – but the whole process was very confusing, as I didn’t think I was eligible since I’m not operating like a business.

    Not the brightest star in the sky when it comes to tax – but I’m assuming the money coming in from AdSense will add to my personal income for income tax?

    If I don’t earn $75,000 per year, I won’t have to register for GST.. not sure what to make of this – if I did earn over $75,000 (I wish!) would I have to add that to my income AND pay 10% of it as GST as well?

    I think if this hobby starts to earn more than $100 a month I’ll have to get onto a tax accountant about what to do!

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