The US Treasury Department and business groups are at odds with Australia over its taxation of software — and that could prompt higher taxes, higher prices, and maybe even a rethink by US companies over how they’ll do business there.

The dispute stems from a January draft ruling, in which Australian authorities lay out when they will treat companies’ payments to bring software into Australia as royalties that are subject to withholding taxes.

The US Treasury and business advocates complain that Australia’s position is too broad and strict, and flies in the face of tax treaties and international guidance …