Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. GST commenced in Australia on 1 July 2000 and was introduced to replace a range of State and Federal taxes, duties and levies.
Only certain businesses are required to register for GST, currently those businesses with a GST turnover of greater than $75,000 per annum and $150,000 per annum if you are a Not-For-Profit organisation. If you are registered for GST, then you must complete and lodge your Business Activity Statement (BAS) at the end of each period (monthly or quarterly dependent on your turnover) with the ATO and remit your GST accordingly.
What now for the GST?
Fifteen years after the introduction of the GST in Australia, debate still rages over what should be taxed and whether the GST rate should increase.
The Treasurers’ workshop late last month resolved to keep the GST rate at 10% but enable a series of other changes. We look at the key areas of change:
• GST on online products
From 1 July 2017, the GST will be broadened to apply to all goods purchased online and imported from overseas. Currently, GST does not apply to inbound goods under $1,000.
The Treasurers have opted for a vendor registration model which means that they are relying on businesses based overseas and selling into Australia to register and comply voluntarily with Australian tax law. The problem is how to collect the tax from businesses that have no obligation to comply and the Government has no jurisdiction to pursue tax owing. It is almost impossible to bring all but the largest of providers into the GST net.
• The ‘Netflix tax’: GST on digital goods
Draft legislation released on Budget night broadens the GST to digital products and other imported services supplied to Australian consumers by foreign entities in a similar way to equivalent supplies made by Australian businesses.
Expected to generate $350m over 4 years, the tax treats streaming or downloading of movies, music, apps, games, e-books as well as other services such as consultancy and professional services in a similar way to local suppliers. In some cases, the GST liability might shift from the supplier to the operator of an electronic distribution service where those operators have responsibility for billing, delivery and terms and conditions.
GST on digital products is intended to apply from 1 July 2017.