The rules for GST-free supply may be about to change. Alison Marshall, Indirect Tax Specialist, analyses the potential impact.
While the proposed legislative changes in Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016 are clearly targeted at non-residents, the proposed changes to the goods and services tax (GST) free provisions also affect Australian resident suppliers.
Under the current law a supply (of something other than goods and real property) to a non-resident, that otherwise meets the requirements to be GST-free, is prevented from being GST-free where it is provided (or required to be provided) to another entity in Australia.
Broadly, under the proposed law changes a supply will be GST-free if the other entity (to which the supply is provided) is:
Many of the circumstances where GST currently applies to supplies to non-residents will, after the change of law, be GST-free. For example, an engagement with the global head office (outside Australia) that includes the provision of services to an Australian subsidiary will, following the change, be GST-free.
Now is the time to look at: