United States

Australia

RSM has 29 offices in Australia. Services make up the largest part of the Austrailan economy, accounting for about three-quarters of its jobs. Despite low unemployment, little public debt and a strong financial system, the country's two-decades of growth has been dampened by drops in key export commodities. 

Content provided below reviewed and updated on Jan. 15, 2018

Legislative effective date

July 1, 2017

Name of tax

Goods and services tax (GST)

Electronic supplies

Australian legislation does not specifically define or identify what is meant to be encapsulated by the digital service rules. Rather, it takes a broad sweeping approach and specifies that intangible supplies are the supply of “anything other than goods or real property.” As such, any service that utilizes little to no human interaction and is provided via electronic means would likely be treated as a digital service.

The legislation notes that a digital service is connected with Australia, thereby taxable, if any of the following conditions apply:

  • The purchaser is an Australian consumer (i.e. business to consumer).
  • The service is consumed in Australia.
  • The sale is made through an enterprise that operates in Australia.
  • The sale is of a right or option to purchase something that would be connected with Australia.

Registration

Nonresident businesses that generate revenue in excess of A$75,000 in relation to services supplied to B2C customers are required to register.

There is a simplified registration process that can be applied.

The registration process is completed as follows:

  • To access the online registration form a supplier will need a secure credential called an AUSid.
    • The supplier will be provided with the AUSid during the online registration process.
  • Download the AUSid app and provide the name, date of birth and email address of the authorized person.
    • The supplier can then access the online platform and apply for a simplified GST registration.
  • The supplier can use the AUSid to authenticate and securely access the online platform for simplified GST whenever it is needed.
  • The Australian Tax Office (ATO) will then send a unique Australian Taxation Office Reference Number (ARN) within one business day of completing the registration process.
  • The ARN is a unique 12-digit numerical identifier used to identify the supplier in ATO systems and may be used as an identifier on invoices.

Aside from this simplified process, a full registration process also exists.  Full registration requires more detail and could be effected with the assistance of RSM Australia.  Full registration allows the supplier to claim a GST credit for any Australian GST paid by the supplier.

Customer identification

B2B customers are those that are GST registered and provide details of their GST number. All other customers, including non-GST registered business customers, are treated as B2C.

B2B customers will self-assess GST under the reverse charge rules, whereas B2C customers will be charged GST by the supplier.

Customer location

GST is charged to customers under the B2C analysis if they are Australian residents. B2C supplies to nonresidents are not subject to GST. In order to determine if a customer is GST resident, the supplier can use the internet protocol (IP) address of the device being used, the address recorded on the payment card or some other reasonable method.

Supplier identification

There is no distinction for domestic vs. foreign person, as the supply of services by both are taxable in Australia. Similarly, there is no distinction for certain suppliers (e.g., nonprofit organizations), as they will bear responsibility for GST if they meet the threshold.

For supplies conducted through a third-party platform, it is the platform operator who has the obligation to account for GST unless otherwise agreed with the principal supplier. A service, including a website, internet portal, gateway, store or marketplace, is an electronic distribution platform if the following three items are present:

  • The service allows entities to make supplies available to end users.
  • The service is delivered by means of electronic communication.
  • The supplies are to be made by means of electronic communication.

However, a service is not an electronic distribution platform solely because it is one of the following two providers:

  • A carriage service (within the meaning of the Telecommunications Act 1997)
  • A service consisting of one or more of the following:
    • Providing access to a payment system
    • Processing payments
    • Providing vouchers, the supply of which are not taxable supplies 

Procedural matters

Invoices should not be issued under the simplified online registration process.

Evidence of business customer status (GST registration) must be obtained and retained otherwise the customers will be assumed to be non-GST registered, and GST will need to be charged.

Failure to collect and remit the GST will expose the supplier to penalties and interest charges. Penalties can range from 10 percent to 50 percent.

A voluntary disclosure program is available and might support mitigation of the risk of penalties.

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