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Australia Explains New Digital Tax Regime

by Mary Swire, Tax-News.com, Hong Kong

14 June 2016


The Australian Taxation Office (ATO) has issued guidance on a new law that will apply the goods and services tax (GST) to international sales of services and digital products from July 1, 2017.

The change will affect a broad range of products, including the streaming or downloading of films, music, apps, games, and e-books, as well as services such as architectural or legal services.

Those who sell digital products or services to Australian consumers must register for GST with the ATO if their sales within a 12-month period are AUD75,000 or more. Once registered, they must report and pay GST to the ATO on sales made from July 1, 2017.

The ATO said that a simplified electronic system will be made available for registration, lodgement, and payment of the GST. It will be accessible via the ATO's website from April 1, 2017. Sellers will be able to register with minimal proof of identity, lodge and pay GST quarterly, and will not need to provide a tax invoice or adjustment note to their customers.

The GST rate in Australia is 10 percent. As the ATO explained, "1/11th of the amount you charge for sales of digital products or services to Australian consumers will be the GST amount you must pay." Australian consumers are Australian residents who are not registered for GST.

The ATO said that sellers can comply with the new rules by taking reasonable steps to obtain information or by using information captured in their business systems to determine if their customer is an Australian resident. It added that obtaining an Australian Business Number and statement from their customer that they are GST registered will assist in determining their status as a consumer.

TAGS: tax | business | revenue guidance | legal services | law | goods and services tax (GST) | Australia | tax authority | services

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