Hi everyone,

For years I've had my main website hosted on US based servers and have earned a few $$$$ doing websites and other services for people, and only now have I bothered to think would I be owing tax money to the US because my site is hosted on US servers? I'm based downunder and most of my clients have come from NZ/Australia (with one from Ireland).

Originally Posted by sfidirectory

I'm based downunder and most of my clients have come from NZ/Australia (with one from Ireland).

Depends on the tax laws in the country in which you (and/or your company) are resident.

For example, if you are a UK resident, working in the UK and do things on websites around the world, and have a company that belongs 100% to you; this company is likely to be UK tax resident, paying UK tax.

Disclaimer: I am not a financial advisor! Best to seek a (free) consultation with a tax expert (e.g. a specialist accountant) in the country where you reside.

since you're clients werenot from the us it#s highly unlikely that you owe the us tax money, since you're not a us citizen

But yeah, also not a financial advisor

No, unless you have a company in the USA you will just need to declare your income to the ATO.

Thanks for everyones feedback . I think my home country and the US have a tax agreement so people don't have to pay double tax or something like that. I am not making millions and if I was I'm sure I would've received some sort of notice from the US Government.

Originally Posted by sfidirectory

Hi everyone,

For years I've had my main website hosted on US based servers and have earned a few $$$$ doing websites and other services for people, and only now have I bothered to think would I be owing tax money to the US because my site is hosted on US servers? I'm based downunder and most of my clients have come from NZ/Australia (with one from Ireland).

Renting a server you do not owe any tax. If you own a server however that changes, so make sure you do not co locate.

I think you are payable to your own government and not the US government (not sure though)

Basic rule of tax is you pay tax in your home country first and then anything else.I think online earning is little grey area where only big corporations rules are set out not tiny fish like us.LOL.Even if they do tax you way out of this is showing them that you pay tax in your home country as tax rules says you can't be double taxed for same income unless there is difference in tax rate.

Hope this helps

Originally Posted by sfidirectory

Hi everyone,

For years I've had my main website hosted on US based servers and have earned a few $$$$ doing websites and other services for people, and only now have I bothered to think would I be owing tax money to the US because my site is hosted on US servers? I'm based downunder and most of my clients have come from NZ/Australia (with one from Ireland).

Hey man, I understand how confusing these things can be when you start out. Here's what I know on the subject:

Scenario #1: Your current scenario

If anything, you should be able to claim the server costs as a business expense and hence save a little tax when you're filing for income tax in Australia.

Since you're an Australian citizen and you're conducting your business in Australia (I'm assuming the bank account to which you receive payments from your clients in Australia), you have to pay your taxes to the Australian Government, and not to the U.S. Government.

Scenario #2: An Aussie who owns a company in America

But lets say you were an Australian citizen conducting business in the United States through a company you incorporated in the U.S. regardless of whether you reside in the U.S. or not. Now if you were receiving payments to the company's bank account in the U.S., then you would have to pay taxes to the U.S. Government body called the IRS (Internal Revenue Service) and also local/state taxes such as sales or services tax depending on the nature of your business.

And since you're an Australian citizen, in theory you'd also have to pay taxes for the second time to the Australian Government whenever you withdraw money from the business for personal use. This would be considered as your personal income, hence leading to double taxation from the Aussie government based on their taxation structure for the same.

However in reality, you would be spared of the double taxation by the Aussie Government, if it has a DTAA (Double Taxation Avoidance Agreement) with the U.S. Government. Most governments usually do!

Scenario #3: U.S. citizen who owns a company or makes money outside of the United States

On the contrary, US citizens are taxed for a second time regardless of whichever foreign country they make money in, however only if they make above $91,400 in a given year. But I believe there are also some more exemptions that U.S. citizens can avail, which are beyond my limited knowledge.

This is one of the reasons a very small minority of U.S. citizens are giving up their U.S. citizenship. Not worth it IMHO though!

Bottom Line: If one is looking to do business outside of their country of citizenship, then one should consult with a corporate lawyer who specializes in laws pertaining to running an international business or with an experienced CA (Chartered Accountant) or a CPA (Certified Public Account).