Proposed new rules in relation to overseas businesses exporting goods and services direct to Australian consumers may require them to register for Australian Goods and Services Tax from 1 July 2017. Currently, Australian consumers acquiring goods and services from overseas do not pay GST on the supply if their value is less than $1,000. This exemption ceases on 1 July 2017.
In an attempt to make such transactions comparable to those of Australian suppliers, the government will require many of these overseas suppliers to register for and charge GST. Given many items acquired overseas are still significantly cheaper than in Australia, it seems unlikely this will have much impact on consumers. However, at least Gerry Harvey will be happy.
Referred to as the ‘Netflix Tax’, this change will mean your overseas-bought subscriptions, clothing, shoes, books (including digital books) and more will likely increase in price by 10% to account for GST from 1 July 2017. You should update your wardrobe and digital library before then if possible!
Overseas suppliers exporting goods and services, including digital products or rights, into Australia will have to register for Australian Goods and Services Tax if:
- They supply to Australian residents who are NOT registered for GST. There are two tests the overseas supplier will need to consider in making this determination.
- The value of the Supplies made into Australia will be $75,000 or more per annum ($150,000 for not-for-profits).
It should be noted that, from 1 October 2016, business to business cross-border transactions are no longer subject to GST.
Where the sales are made through electronic marketplaces such as Amazon and eBay, it will be the platform operator who will have the liability for the GST rather than the product vendor.
If you are an overseas exporter of good and services to Australia and need assistance with these rule changes, please contact Allworths for more information on how these changes may affect you. Alternatively, more information is available from the ATO here.