Since the introduction of the Australian goods and services tax (“GST”) from 1 July 2000, Australian consumers have traditionally enjoyed the benefit of not having to pay GST on their purchases of digital products, services or goods from overseas suppliers except for imported goods with a value of greater than AU$1,000. Given the increased popularity of online transactions in the past decade and the Australian Federal government’s objective of increasing the competitiveness of Australian businesses, this traditional landscape will change as follows:
(i) GST on imported services and digital products
From 1 July 2017, the sales of digital products and/or services to Australian end customers (and/or Australian businesses who are not registered for GST) by a foreign resident will be subject to Australian GST if the foreign resident meets the registration turnover threshold (that is, the sales to these Australian consumers in a 12 month period exceed AU$75,000 or more).
If this is the case, the foreign resident will be liable to report and pay GST (at 10%) to the Australian Taxation Office ("ATO"). The GST will be 1/11th of the amount which the foreign resident charges the Australian consumer for the digital products and/or services.
(ii) GST on low value imported goods
From 1 July 2018, Australian GST will be extended to low value imports of physical goods (with a customs value of AU$1,000 or less) purchased by Australian end consumers (and/or Australian businesses not registered for GST) from a foreign resident. Similarly, the non-resident supplier of the goods will be liable to report and pay GST (at 10%) to the ATO provided they meet the registration turnover threshold of AU$75,000.
The existing law regarding Australian GST on imported goods with a customs value greater than AU$1,000 has not changed. That is, GST is collected by the Australian Customs and is paid by the importer of the goods (being the Australian customer).
If you would like to find out more information on the above GST changes or would like Camphin Boston to assist you with Australian GST registration, please do not hesitate to contact our Tax Director, Melanie Lam or one of our Partners.