GST on imported services and digital products

|by Cheryl Hindshaw|Taxation and Compliance

Australian goods and services tax (GST) applies to sales of imported services and digital products to Australian consumers. Organisations are required to register for GST in Australia if you supply imported services or digital products and both of the following apply:

  • you are running an enterprise
  • your GST turnover from sales connected to Australia and made in the course of your enterprise, meets or exceeds the registration turnover threshold of A$75,000 (or A$150,000, if you are a non-profit body).

This means that if the value of your sales that you make to Australian consumers (plus any other sales you make connected to Australia) is A$75,000 or more in a 12-month period, you need to register for GST. GST turnover on your sales not connected with Australia are not taken into consideration.

Merchants who sell services or digital products or electronic distribution platform operators who facilitate these sales should consider whether they need to register for GST. A sale is treated as being made by an electronic distribution platform operator, instead of the merchant, if the platform operator is responsible for GST on the sale. These sales will be counted towards the platform’s GST turnover, instead of the merchant's GST turnover.

GST does not apply to purchases of imported services and digital products for your business use if you are a business registered for GST in Australia.

Example – Australian business registered for GST

Kev's Karate is an Australian business registered for GST. The business makes an online purchase of an electronic version of a computer protection program from an overseas supplier 'Computer B Safe'. Computer B Safe is registered for Australian GST. The computer protection program is for business use.

The price listed for this product on Computer B Safe's website is $200 plus additional taxes that may apply (for example, GST). Kev's Karate is making a business purchase, provides their ABN and tells the supplier they are registered for GST. Therefore, Computer B Safe does not charge Kev's Karate Australian GST on the purchase.

If purchasing imported services or digital products only for your private use, you should not provide your ABN or state you are registered. If you do supply this information, you will need to pay the GST to the ATO under the reverse charge rules.

Further information in this regard can be sourced via the ATO Website:

https://www.ato.gov.au/Business/International-tax-for-business/GST-on-imported-services-and-digital-products/

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