Author: Richard Asquith, VP Global Indirect Tax, Avalara
From July 2017 forward, sales of electronic services by foreign providers to Australian consumers will be liable to a 10% GST. These services include: streaming video, music and gaming; e-books; downloads or cloud-based software; subscriptions to membership or news websites; mobile phone apps; and online education.
The extension of GST to non-resident providers will require them to GST-register with the Australian Tax Office (ATO) once they exceed the registration threshold of AUS $75,000 per annum. Once registered, providers will be obliged to submit quarterly GST returns to the ATO, declaring all sales and applicable tax.
In the case of services and apps sold through an online distribution platform, such as Google Play and Apple iTunes, the platform is responsible for charging and reporting the GST.
The Australian e-services tax reforms bring it into line with similar changes over the past two years in the EU, South Africa, South Korea, Japan and New Zealand. Many other countries are expected for follow suit in the next 12 months.
In addition to the changes on e-services, the ATO is making more foreign eCommerce goods transactions with consumers liable to GST. It is scraping the current GST-free threshold of AUS $1,000 per package, and making all arrivals of goods from foreign eCommerce providers potentially liable to 10% GST.
As with the new e-services rules, the AUS $75,000 GST registration threshold will apply. This will mean that possibly fewer than 100 offshore online retailers will be forced to GST-register and file quarterly returns. The vast majority of small eCommerce sellers will still be able to sell GST-free.