New Australian law applying GST to imported digital products and services

Australia has introduced a new law applying the Australian Goods and Services Tax (GST) to international sales of digital products and services provided to Australian consumers. Under the new law, overseas businesses will be required to pay GST on these sales from 1 July 2017.

What services and digital products are covered by the measure?

What services and digital products are covered by the measure?

Examples of digital products include downloaded movies, games and electronic books. Examples of services include architectural, legal or educational services.

The new law applies very broadly to sales of anything except non-digital goods or real property.

If you sell through an electronic distribution platform, for example an app store, the platform operator is responsible for registering, reporting and paying the GST.

Do you need to register for the Australian GST?

If you sell digital products or services to Australian consumers and you meet the registration turnover threshold, you need to register for GST with the ATO. You will meet the registration turnover threshold if your sales to Australian consumers in a 12 month period are A$75,000 or more. Once registered, you need to report and pay GST to the ATO on sales made from 1 July 2017.

How do you register?

A simplified system will be available for you to electronically register, lodge and pay the GST. You can access this service on the ATO’s website from 1 April 2017. Under the simplified registration system, you:

  • will register electronically with minimal proof of identity
  • will lodge and pay GST quarterly
  • do not need to provide a tax invoice or adjustment note to your customers
  • are not able to claim tax credits.

How do you comply with the new Australian GST laws?

The GST rate in Australia is currently 10%, therefore 1/11th of the amount you charge for sales of digital products or services to Australian consumers will be the GST amount that you must pay.

Australian consumers are Australian residents who are not registered for Australian GST.

  • Taking reasonable steps to obtain information or using information captured in your business systems can be relevant in working out if your customer is an Australian resident.
  • Obtaining an Australian Business Number (ABN) and a statement from your customer that they are GST registered will assist in working out that your Australian resident customer is not an Australian consumer.

If you have any questions and queries regarding doing business in Australia or want to know if these changes affect your business please don’t hesitate to contact

Marius Fourie
Senior Accountant
T: 02 9984 7774
E: mariusf@northadvisory.com.au

Martin van der Saag
Director
T: 02 9984 7774
E: martinv@northadvisory.com.au

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