June 17, 2017 by Noé Vicca - Principal
GST on services and digital products:
From 1 July 2017, goods and services tax (GST) will apply to cross-border supplies of imported services and digital products sold to Australian consumers. Note from the outset: The GST on the export of digital product and services is a business to consumer (BtoC) taxing measure, subject to the below exceptions.
In introducing this GST measure, Australia is adopting the Organization for Economic Co-operation and Development (OECD) guidelines for BtoC supplies of digital products and services as part of the OECD/G20 base erosion and profit shifting project
What are digital products and services covered by the measure:
The new law applies very broadly to sales of anything except physical goods or real property imported by Australian consumers.
Examples of imported services and digital products from overseas include:
- digital products such as streaming or downloading of movies, music, apps, games and e-books
- services provided digitally such as architectural and legal services
Note: Digital supplies related to education and health services are specifically excluded.
Inbound intangible is a supply of anything other than goods or real property where the recipient is an Australian consumer unless the thing supplied is wholly done in Australia, or the supply is made wholly through an enterprise the merchant carries on in Australia.
Australian consumer sales purchasing of digital products and services:
If you, as an exporter of products and services to Australia, meet the registration turnover threshold of A$75,000 and make these supplies to Australian consumers you will be required to register for GST.
An Australian consumer is simply defined as an Australian resident that is not registered for GST, or if registered, does not acquire the intangible supply for their business.
Australian business buying digital products and services:
If you are an exporter of digital products and services to Australian GST registered business, you will not charge and collect GST on your sales if you are provided with the following by the Australian business:
- their ABN.
- they confirm they are registered for GST.
- The Australian business provides the same prior to an invoice being issued.
Returns and Remission of GST
You must lodge your GST returns quarterly if you are registered through the simplified GST registration system for non-residents.As a quarterly payer, you calculate and report at the GST labels in your BAS and pay your actual GST amounts quarterly.
As a non-resident, you can pay your business activity statement (BAS) GST amount by credit card or SWIFT. You must make payment by the designated due date to avoid late lodgment penalties
Electronic Distribution Platforms (EDPs)
Special rules apply to electronic distribution platforms (EDPs). Broadly the new Electronic Distribution Platform (EDP) rules, and when an operator of an EDP will be responsible for GST on a supply of offshore low value goods made through their platform, is the subject of a LCG 2017/D4 published on 8 June 2017. Click here for more information
Disclaimer: The contents herein are intended for general information only and should not be construed as legal or accounting advice. Vicca Chartered Accountants Brisbane bears no responsibility for any loss that might occur from reliance on information contained in this publication. Please do not reproduce, transmit or distribute the contents herein in any form without prior permission from Vicca Chartered Accountants, Taxation Accountants Brisbane Australia.