The ATO, Tax and the Internet: he Emperor’s New Clothes?

This article provides an analysis of the Australian Taxation Office’s (“ATO”) second report on the taxation of electronic commerce, Tax and the Internet, in the context of international developments. It begins with an overview of the basic principles that international consensus has determined will apply to taxation of electronic commerce and how they apply in Australia. A substantial part of the article covers the ATO discussion of the current state of the Internet and the opportunities this affords the ATO, particularly to improve its service delivery. The remainder of the article discusses the impact of electronic commerce on the three crucial areas of jurisdiction to tax, the administration of the tax system and indirect taxation.