On-line Shoppers Face Major GST Changes from 1 July 2017

On Budget night, the Commonwealth Government released for consultation an exposure draft Bill and associated explanatory material that would extend the application of the GST to cross border supplies of digital products and services imported by consumers from 1 July 2017.

“The Treasurers acknowledged that this is a vital integrity measure to prevent GST base erosion but recognised that it would require work over time.

In line with these reforms, the Australian Leaders’ Retreat on 22 July 2015, agreed to broaden the GST to cover overseas on-line transactions (physical goods) under $1,000.

At the meeting the Commonwealth Treasurer put forward a proposal that relies on a vendor registration model as a method of collecting the GST for the states and territories. As goods would not be stopped at the border, administering a vendor registration model would have a relatively low cost.

The Commonwealth also recommended that the existing threshold for the GST liability be reduced to zero, in line with the GST collection for other products and services. The states and territories have unanimously agreed to this in principle.

Non-residents (overseas suppliers) will be the ones who charge, collect and remit the GST for digital and physical products. As is the case in Australia, only vendors with an Australian turnover of $75,000 will need to register and charge the GST.

The Commonwealth will draft legislation for the application of the new arrangements from 1 July 2017.”

We will publish further information shortly.

Russell Wilkinson