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  • Non-resident business staff detailed findings

    The table below shows the key insights from nine non-resident business staff, who will register, report and/or pay GST under the new measure. The non-resident businesses who responded to the survey represented the following sectors:

    Sector

    Percentage

    Streaming media (e.g: TV, movies, music, games)

    33.33%

    Electronic distribution platform (e.g: online marketplaces, suppliers of phone apps)

    44.44%

    Services (e.g: education, architectural, legal, accommodation, facilitation, dating)

    11.11%

    Internet service

    33.33%

    Insurance cover

    11.11%

    Online gambling

    11.11%

    Spread across all of these:

    • Financial services
    • VAT/GST interface for other non-resident businesses - facilitating the checkout process of multiple of different Merchant in order to provide ease to deal with the VAT /GST obligation and increase conversion rate
     

    44.44%

    Expected number of non-resident business registrations

    The respondents indicated, 28% (2) would register one, 43% (3) would register 2 to 3 and 28% (2) would register four or five; and 0% (none) would register more than five non-resident businesses from within their business group.

    General online service needs and requirements

    In general, of the nine non-residents we received input from the following findings were noted:

    • 8 out of 9 would be potential users of the Simplified GST system.
    • 6 out of 9 would register the business when they first find out the business has an obligation in Australia; they all would expect to set up a credential at the same time. 2 out of 9 would want to set up a credential independent from any business reporting obligations, i.e. as soon as possible.
    • 1 out of 9 said they would register the business when they first lodge a return; they all would expect to set up a credential at the same time.
    • 5 out of 9 would not use their personal device to register, report and pay GST; of those who said they would do so, four referred to a personal laptop or desktop computer generally. Only one would use their personal mobile phone to access the Simplified GST system.
    • 8 out of 9 would not use their mobile phone or tablet to access Simplified GST.
    • 1 out of 9 highlighted the need to register non-resident businesses retrospectively and to provide a ‘grace’ period of up to one year to avoid deterring those who realise too late that they need to meet tax obligations in Australia.
    • 8 out of 9 would want the credential be portable between devices rather than locked down to one device. For most respondents, the device used was a desktop or laptop, and not a mobile device.
    • 9 out of 9 would choose password over fingerprint and voice authentication.

    Information needs

    Non-resident business would like more information on the following:

    How to register in Simplified GST

    All

    Registration types

    67%

    Simplified GST reporting obligations

    80%

    Supplies that are taxable

    90%

    Which GST rate to use and how to apply it

    11%

    How to amend a return

    11%

    To obtain this information, they would:

    Search the internet

    77.78%

    Speak to the finance/tax department of the non-resident business

    22.22%

    Speak to an Australian tax practitioner/agent

    66.67%

    Speak to a tax practitioner/agent outside of Australia

    22.22%

    Directly contact the ATO

    77.78%

    Support needs

    Figure 3: The below chart shows the percentage of non-resident business staff expecting different types of support, in order of most expected:

    A link to the data table containing all the information used within this image is available below.

    See full data table for Figure 3.

    • 7 out of 9 would not expect 24 hour assistance. The preferred method of contacting the ATO for assistance was email for all respondents and secure messaging for 78%. A response would be expected within a week. If the response were not received, or the matter was very urgent about half (44%) of the respondents would expect to be able to make contact with a real person via phone.
    • 6 out of 9 expect support to help them with system errors, including administrator access support and an alternative method of authentication where the primary method fails.
    • 1 out of 9 said non-English speaking language support would be nice, but was not expected. The representatives in most affected businesses speak English.

    Authentication needs and requirements

    With regards to the authentication solution, non-resident business staff:

    • 8 out of 9 didn’t consider Hotmail/Gmail/Twitter or Facebook as an appropriate credential for accessing a Government service.

    “Despite using personal device to work, I would not be happy to use personal account (Gmail/Twitter/Facebook) to deal with my tax. It will not feel secure enough”

    • 6 out of 9 preferred an ATO credential over a WoG credential. Those, 3 out of 9, who indicated preference for a Government credential, were indifferent about what type (myGov or else) One respondent stated that the ATO or WoG credential ‘are the same to me’.”
    • 8 out of 9 believed one credential per non-resident business would be enough, with multiple people accessing that credential if GST only needs to be reported. Respondents said 75% of the time, two to three people would access this credential, in 25% of cases it could be between four and five.
      To set up the business credential, respondents said they are willing to provide a:
      • a non-resident business name
      • a phone number
      • an address
      • an email
      • a tax identification or company number from their country of residence
      • a VAT number from their country of residence, and
      • information of the types of supply they make and register for.
       
    • 1 out of 9 would set up an individual credential, but were only be willing to provide their first and last name as well as email address. They were unwilling to provide their birth date, which indicates they like to keep personal and business affairs separate.

    Figure 4: Rating of digital ID features

    A link to the data table containing all the information used within this image is available below.

    See full data table for Figure 4.

    Simplified GST needs and requirements

    Registering, reporting and paying GST

    • 2 out of 9 said they would engage an external service provider for assistance alongside in-house staff also being involved in meeting the obligation.
    • 7 out of 9 would meet their Australian GST obligations solely in-house.

    We asked non-resident business staff participants to describe who and how many people undertook various activities in connection with their GST obligations. These activities include, acting as the authorised contact, accessing the online GST system, managing access to the system and reporting and paying GST. The responses confirmed feedback received from Australian tax advisors that non-resident businesses rarely engage tax service providers.

    The table below gives a breakdown of how many staff and external service providers could be expected to conduct each activity.

    Activity

    Non-resident business in-house staff do the work

    External tax service provider help with this

    Nominated as authorised contacts for the non-resident business

    Most: 2
    One case: Up to 4

    2 out of 9 reported (1 to 2 would do this for their business alongside in-house staff

    Access the online GST system on behalf of the non-resident business

    Most: 2 to 3
    One case: Up to 4

    2 out of 9 reported 1 to 2 would do this for their business alongside in-house staff

    Report ongoing GST obligations

    Half: 1 to 2

    Half: 3 to 4

    2 out of 9 reported 1 to 2 would do this for their business alongside in-house staff

    Pay ongoing GST obligations

    Most: 2

    Some: 4

    1 out of 9 reported 2 would do this for their business alongside in-house staff

    Manage who has access to the online GST system

    Most: 2
    One case: 4

    1 out of 9 reported 2 would do this for their business alongside in-house staff

    • 9 out of 9 would register the business and report GST
    • 7 out of 9 would pay GST
    • 5 out of 9 would manage access of users to the Simplified GST system
    • 9 out of 9 would register with the Simplified GST system as the non-resident business of digital services does not expect to incur any costs in Australia.
    • 1 out of 9 said they had no concerns about the non-resident business receiving an ABN as they would not set up a business in Australia. (Only one response was received).
    • 9 out of 9 said that quarterly reporting works well for them. One said they would prefer to report monthly and two said they would prefer to report yearly.
    • 9 out of 9 said it would be easy to provide a tax id from another jurisdiction and that it is perceived as normal to provide one for your own country. European VAT/GST reporting systems also request one, so most non-resident business registering with the Simplified GST system would find this a common request.
      • Some new non-resident businesses might not have a tax id from their country at time of registration which could cause delays, but the quarterly reporting cycle should allow for enough time between start up and reporting to obtain one.
       
    • 50% - would register company headquarters and 40% the main business.

    Figure 5: The following features of the Simplified GST system were rated and are shown in order of importance:

    A link to the data table containing all the information used within this image is available below.

    See full data table for Figure 5.

    • 1 out of 9 want to be able to make corrections on future returns, rather than amending a past return.
    • 9 out of 9 reported SWIFT, Corporate Credit and PayPal to be most suitable. The more options the better. None of the non-residents selected Hi-Fx, OrbitRemit or Western Union as payment methods.
    • 6 out of 9 would prefer machine to machine reporting over manual reporting as long as they retain control to review the data before submitting it to the ATO. XML, CSV, Excel were all mentioned as format as well as the accounting software Zero and Thomson Reuters OneSource Reporting.
    • 9 out of 9 said offsetting a GST overpayment towards future debts as default would work ok, but flexibility to request a refund if needed.
    • 9 out of 9 Want to access historical data as proposed (total GST payable, total taxable sales, account balance, account history, last use and login) as well as being able to see the payment status, the next filing deadline, credits on the account
    • 1 out of 1 want to access the latest GST rate from within the Simplified GST system and information about in which cases a reduced rate applies etc.
    • 1 out of 1 wants to see the status of the account and any warnings
    • 1 out of 1 look for a ‘grace period’ (of about one year) in expected cases of where a non-resident business only becomes aware after 1 July 2017 they need to register and report in Australia. Late registrations should be accommodated and not penalised.
      Last modified: 03 May 2018QC 55175