Changes to GST

New rules to apply Goods & Services Tax (“GST”) on supplies of goods, services and digital products by international businesses to Australian consumers were put in place from 1st of July 2017.

If these rules apply to a non-resident business, it will need to register for and remit GST in relation to supplies made on or after this day.

Under current threshold rules, a non-resident business will only need to consider the need to register for GST if it makes supplies into Australia to Australian consumers that, in total, exceed $A75,000. Australian consumers, broadly, includes customers who are not registered for GST or, if registered, are making the acquisition, not as part of their registered business activities.

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Suppliers of the following types of services or goods to Australian consumers will, therefore, need to review whether they need to be registered:

  • Digital products such as streaming or downloading of movies, apps, games, e-books, etc.;
  • Services, such as legal services;
  • All goods; previously, a low-value threshold applied whereby goods of a value less than $A1,000 were exempt from GST; this exemption will no longer apply.

Overall, the above changes seek to widen the Australian GST net by requiring certain non-residents who supply to exempt consumers to register, collect and remit GST on the supply. In effect, the Government is seeking to level the playing field by placing non-resident suppliers on a similar footing to local businesses supplying Australian consumers.

Other changes, effective from 1 October 2016, on the other hand, seek to remove the requirement for non-resident businesses to register for GST where they only supply to Australian businesses that are registered for GST. Business-to-business transactions generally have no net revenue outcome, so removing the registration requirement in these cases is a positive step. Each case does, however, need to be reviewed to determine the requirement to register or not.

Online applications for registration by non-resident businesses affected by the new rules effective 1 July 2017 can be completed with the Australian Taxation Office.

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