GST cross-border legislation tabled

GST cross-border legislation tabled

Michael McAuliffe, Indirect Tax specialist, discusses the recently-tabled legislation which will change the application of Goods and Services Tax to non-residents.

Senior Manager, Tax

KPMG Australia


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After consultation with taxpayers, the Government-tabled legislation on 10 February 2016 which, as previously advised, will change the application of Goods and Services Tax (GST) to non-residents.

The measures contained in Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016 are arguably one of the most significant changes to the GST Act since inception and will require careful planning and consideration.

Application of GST to intangibles

This integrity measure is designed to level the playing field between overseas online retailers and ‘bricks and mortar’ Australian retailers. In essence, digital products and other intangible supplies by non-resident suppliers or operators of electronic market places will be subject to GST if provided to Australian resident consumers. Notable changes from the previous Exposure Draft include:

  • inclusion of offshore gambling supplies
  • clarification on when a supplier has reasonable belief of the status of its customer, the electronic market place rules and limited registration option.
  • a reverse charge and/or a penalty for falsely representing being an Australian consumer.

This measure, if passed, will apply for supplies from 1 July 2017, including supplies under long-term contracts.

Non-resident supplies

This measure includes a raft of amendments that largely impact non-residents who supply services to Australian GST-registered businesses and who will no longer be required to register and account for GST on business to business transactions which offer no net GST revenue gain to the government. Recipients who are not entitled to full GST credits will be liable for GST on these supplies through the operation of a reverse charge.

The amendments also include provisions to allow GST-free treatment for certain supplies to non-residents to remove the need to register to claim the GST. This applies to supplies of services and goods related to warranty obligations of non-residents and where a supply is made to a non-resident recipient but it is provided to a GST-registered business.

The measure, if passed, will apply from the first quarter after Royal Assent (i.e. likely 1 July 2016).

Given the breadth of the changes, we are preparing a detailed Brief in relation to the amendments, that will be released next week.

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