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.
Transitional rules for GST
A transitional rule will apply to overseas suppliers that:
- meet the registration turnover threshold of AUD75,000
- supply digital products and services before 1 July 2017 and continue after this date. The portion after 1 July 2017 is subject to GST.
For example, if you supplied a 12 month subscription in September 2016, you may be required to pay GST on the portion of the sale for July and August 2017.
How do I register?
A simplified system will be available for you to electronically register, lodge and pay the GST. You can access this service on the Australian Taxation Office (“ATO”) 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; and
- are not able to claim tax credits.
Do I 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 AUD 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 I 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 to the ATO. Australian consumers are Australian residents who are not registered for Australian GST.
You need to take reasonable steps to obtain information or use information captured in your business systems to work 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.