Digital Services and Intangibles supplied by Foreign Entities to Australian Consumers
Under the current Australian GST legislation, digital services and intangibles supplied by foreign entities and obtained by ‘Australian consumers’ are not generally subject to GST.
However, Schedule 1 of Tax and Superannuation Laws Amendment (2016 Measures No 1) Bill 2016, which takes effect from 1 July 2017, focuses on ensuring that supplies of digital products, such as streaming or downloading of movies, music, apps, games and e-books as well as other imported services such as consultancy and professional services, supplied to 'Australian consumers' by foreign entities, will be subject to GST.
An entity will be required to register for Australian GST, where the value of taxable supplies made to Australian consumers exceeds the GST registration threshold of AU$75,000 (which is calculated on an actual 12 month rolling basis or on a 12 month projected basis).
Broadly, an 'Australian consumer' will be an Australian resident, other than a GST registered entity which uses the services acquired (wholly or in part) for business purposes, such as a private individual, or a non GST registered business.
Clearly identifying whether an Australian client is an 'Australian consumer' may not be straight forward, however as an overview, a supplier must take reasonable steps to obtain information concerning whether the recipient of the supply is an 'Australian consumer' and having taken these steps, reasonably believe that the recipient is not an 'Australian consumer'. It is important therefore to ensure that ordering systems capture information such as whether a customer is GST registered.
Of note, entities making such supplies to Australian Consumers, which are required to register for GST, can take advantage of reduced administration requirements, under the ‘Limited GST Registration’ system, however GST credits incurred (if any) will not be recoverable.
GST Imports Threshold – Low Value Goods (under $1,000) subject to GST – Postponed until 1 July 2018
Imported goods below AU$1,000 are not currently subject to Australian import GST, however, the Australian Government announced in the 2016-17 Budget that from 1 July 2017, GST (at 10%) would be applied to low value (under AU$1,000) imports of goods made by Australian consumers. This has now been postponed until 1 July 2018.
