Quietly hidden in the 2017 Budget papers is a change that will open a new growing income stream for the ATO. Most of us have become accustomed to accessing information, education or entertainment from digital suppliers like Amazon. Professional services and consultants services will be taxed in the same manner as those delivered face to face.
Whilst attention is on Amazon’s impact on the bricks-and-mortar retail sector, with an aggressive growth and customer service focus; the ATO quietly harnessed another section of the international trade.
Commencing July 1st, 2017 all foreign business to customer supplies will now have GST applied to Digital Supplies.
What are “Digital Supplies”?
Have you paid for an e-book? Joined a webinar mentoring or education group? Purchased access to a video training course? Paid for an APP, game or song? If you are an individual (customer) GST will be applied to your transaction. For this reason, this tax has become known as the ‘Netflix Tax’
Are there any exemptions?
If you are a business that is registered for GST you will not be charged GST. (B to B transactions) The implementation of this measure ensures that Australia is consistent with OECD’s International GST Guidelines.
The primary purpose of the tax is ensure the application of the ‘destination principle’. Tax is levied and collected where the consumption of the product occurs.
How will the GST be levied and collected?
If you use a major supplier such as Amazon, it is their responsibility to levy and collect the GST, and then pay this exact amount to the ATO. If you wish to read more on this subject, click here to read a detailed explanation by RSM Global.
Business customers who do not wish to pay GST will need to register this with Amazon. In time, other EDPs (Electronic Distribution Platform) will require you to do the same. Contact each supplier you use to determine how you can address this with them.