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Jun 2017 2 Minutes

GST on International Supplies of Goods & Services

GST on international supplies of goods & services There are two significant changes for non-residents doing business in Australia or supplying goods or services online to Australian consumers.

From 1 July 2017 (pending passage of Bill before Parliament), low value goods (ie. goods with a value equal to or less than A$1,000) will be subject to GST.  Where these are currently exempt from GST, the new rules will impose GST on all physical goods sold to consumers and imported into Australia.  This means that GST will apply to all cross-border supplies of digital products and other services imported by Australian consumers.

This includes:

  • services such as architectural or legal services;
  • digital products such as streaming or downloading of movies, music, apps, games and e-books.

This will require the supplier of these products or services to collect the GST from consumers, otherwise, they will be left footing the GST liability.  It also poses a huge administrative issue as suppliers not currently registered for GST in Australia will now need to be registered in order to remit these amounts.

Additionally, from 1 July 2017, non-resident entities may need to register for goods and services tax (GST) in Australia if both of the following apply:

  • It is carrying on an enterprise; and
  • Its GST turnover from sales that are “connected with Australia” and made in the course of its enterprise, meets or exceeds the registration turnover threshold of A$75,000 (or A$150,000, for a non-profit body).

Essentially, a sale of something other than goods or property is connected with Australia if any of the following apply:

  • the purchaser is an Australian consumer;
  • the thing is done in Australia;
  • an entity makes the sale through an enterprise that it runs in Australia; and
  • the sale is of a right or option to purchase something that would be connected with Australia.

If your business acquires goods or services on line from non-resident entities from 1 July 2017 be aware that GST may be raised and is therefore claimable.

The Government has been declaring that it wants to target international sales to Australian consumers to level the playing field for Australian businesses.  The changes discussed above seem to achieve this, at least in theory.  However, the “proof will be in the pudding” when these measures are enacted from 1 July 2017 as to how these changes will be administered and enforced.

If you would like to more details of the above please contact Juanro on (08) 9364 9988.