Australian Goods and Services Tax (GST) is added to the sale of digital goods to Australian consumers from non-resident suppliers.
As of July 2017, the Australian Tax Office issued a Decree that required non-resident companies to register for GST in Australia and account for GST if they meet the A$75,000 registration threshold. This is no longer the case.
But first, let’s do a quick recap on GST in Australia.
An overview of Australian GST for non-resident suppliers
Goods and Services Tax (GST) is one of the various consumption taxes chosen by governments and applied to sales of goods and services in Australia. In other countries, this is often referred to as Value-added Tax (VAT). Where it gets slightly more complicated is when GST applies to non-resident companies supplying to Australian consumers, especially regarding digital goods and services.
To help standardize the GST process, the Australian Taxation Office issued The Decree on Goods and Services Tax (GST) in July 2017. The Decree clearly stipulated the obligations that non-resident businesses had to meet regarding GST on digital goods, including paying a GST rate of 10%. However, as of March 2023, the ruling was withdrawn. Does this mean that GST no longer applies to digital products from non-resident suppliers? Not quite.
Following recent confusion surrounding whether Australia would tax GST on digital products from non-resident suppliers or not; we’ve deep dived into recent Aussie tax rulings. Here’s what you need to know.
Australia withdraws GST tax ruling
On 1 March 2023, the Australian Taxation office issued a withdrawal notice regarding the tax ruling on the application of GST to supplies of digital products, made to Australian recipients by non-resident suppliers. This is also known as The Decree on Goods and Services Tax (GST).
The announcement clarified that changes in legislation within the New Tax System (Goods and Services Tax) Act 1999, this now ensures that GST is applied to all supplies of digital products as well as other imported services to Australian consumers.
Needless to say, as GST is now covered within Australia’s GST law, a separate decree is no longer required. Due to these changes, non-resident suppliers are now relieved from having to account for GST on certain supplies. However, it should be noted that GST will still be taxed on digital products, so for the non-resident taxpayer, nothing changes.
Navigate foreign GST with VAT IT
Meeting GST and VAT obligations are critical to ensure successful VAT recovery> However, it’s hard to keep score when the rules keep changing. At VAT IT, we stay in the loop with all the latest legislation, laws and regulations so you can focus on growing your business, while maximising your VAT recovery in multiple countries.
Ready to see where your business could be recovering significant costs due to recent legislation changes that may have slipped under the radar? Reach out to our VAT IT experts here.
Subscribe to our monthly VAT newsletter