GST Changes – July 2018

Impacting overseas businesses selling to Australia

GST on imported services and digital products:

From 1 July 2017 GST applies to sales of imported services and digital products to Australian consumers. This means Australian consumers buying imported services or digital products may have GST included in the price of these purchases. This includes digital products such as streaming or downloading of movies, music, apps, games and e-books, and services such as architectural or legal services.

Low value imported goods

From 1 July 2018, amendments to the GST legislation in Australia will require sellers, online platforms and redeliverers to remit GST on sales of low value imported goods (LVIGs) to Australian consumers.

The context of these amendments is that when GST was first introduced, there was little or no online shopping. In the present day, statistics indicate that Australians now spend over $21b on online shopping each year.

This has led to a perception that there is preferential treatment of online shopping and the Australian retail sector has lobbied in recent years for this disparity to be rectified.

The amendments will require overseas businesses selling goods into Australia to consider a two-tier system whereby LVIGs will be taxed at sale  and goods or consignments over AU$1,000 will be taxed at the Australian border. The responsibility to remit GST to the Australian Taxation Office (ATO) will be with the supplier of the LVIGs and not the Australian consumer.

Law from 1 July 2018
Sales of LVIGs to Australian consumers which have a customs value of AU$1,000 or less at the time of sale will be subject to GST from 1 July 2018.

Who is affected?
The amendments will affect entities that make supplies of goods into Australia where:
• the supply is an offshore supply of low value goods; and
„• the recipient acquires the supply as a consumer.

Source: Australian Taxation Office