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  • Terms we use

    Some terms in this information may be new to you or have a specific meaning in GST law.

    Terms we use:

    See also:

    Imported services and digital products

    Australian goods and services tax (GST) applies to sales made by suppliers outside Australia to Australian consumers purchasing imported:

    • services
    • digital services
    • digital products.

    Imported services and digital products are also known as inbound intangible consumer supplies. This term is used in a number of our guidance and ruling documents.

    Examples of imported services and digital products include:

    • supplies of digital content such as e-books, movies, TV shows, music and online newspaper subscriptions
    • online supplies of games, apps, software and software maintenance
    • webinars or distance learning courses
    • insurance services
    • gambling services
    • online dating services
    • booking services for events or places within Australia (such as hotel accommodation or sports events)
    • website design or publishing services
    • professional association services (ie membership fees)
    • legal, accounting, architectural or consultancy services.

    This law ensures these types of supplies to Australian consumers are subject to GST regardless of whether they are supplied by an overseas-based merchant or an Australian merchant.

    Merchants

    When we use the term 'merchant' we mean any seller of imported services and digital products. We use this term rather than 'supplier' because for GST purposes, an electronic distribution platform operator (ie an online marketplace operator) can also be treated as the supplier.

    Australian consumers

    Two elements need to be met for a purchaser to be an Australian consumer. They are:

    • the residency element
    • the consumer element.

    You can work out the purchaser’s residency by either:

    • using information about the purchaser from your business systems
    • taking reasonable steps to obtain information about the purchaser.

    Once you confirm the purchaser is an Australian resident, you then work out if they are a consumer.

    A purchaser is a consumer if they are either:

    • not a business registered for Australian GST
    • registered for Australian GST but do not purchase the imported services or digital products for use in their business.

    You can treat a supply as not made to an Australian consumer if you have:

    • gathered sufficient evidence, and
    • reasonably believe the purchaser is not an Australian consumer.

    See also:

    Working out the residency element

    You can work out whether a purchaser is an Australian resident by relying on the:

    The business systems approach

    Examples of information from your normal business systems and processes that can assist in confirming if the purchaser is an Australian resident include:

    • the purchasers
    • billing or mailing address
    • bank details, including the location of the bank
    • credit card details, including any descriptor that shows the location of the credit card issuer
    • location data from third party payment intermediaries
    • mobile/cell phone SIM country code
    • telephone country code
    • their country selection
    • tracking/ geolocation software
    • IP (internet protocol) address
    • place of establishment or incorporation of the purchaser (for a business purchaser)
    • representations and assurances given by the purchaser
    • the origin of correspondence, and
    • locations, such as a Wi-Fi spot, where the physical presence of the purchaser is needed.

    The reasonable steps approach

    You are not limited to the business systems approach to confirm a purchaser’s residency. You may also take other reasonable steps to obtain information about the purchaser’s residency.

    There is not a specific factor that will determine whether steps taken are ‘reasonable’. However, the following list provides some guidance on what to consider:

    • the level of interaction you have with the purchaser
    • the types of personal information that the purchaser shares when making a purchase
    • the difficulty and costs involved in seeking additional information about the purchaser’s residency, and
    • the reliability of the information used to determine the purchaser’s residency.

    Evidence using fully automated systems

    If you make supplies using fully automated systems, we will accept that your supplies are made to purchasers that are not Australian residents if:

    • you make automated supplies of services, rights or digital products, and
    • your usual business systems provide at least two pieces of non-contradictory evidence which support that the purchaser is not an Australian resident.

    As evidence, you can use the purchaser’s details if any of the following are outside Australia:

    • billing address
    • mailing address
    • bank details including branch of bank
    • credit card issuer (bank)
    • web-based country selection
    • location detected through tracking/ geolocation software
    • IP address
    • mobile phone number or landline country code.

    You can also use other commercially relevant information that assists to confirm the purchaser’s residency.

    If the available information about the recipient does not consistently point to a conclusion about Australian residency, you should assess the quality and reliability of the available information.

    Information that is necessary for the commercial transaction to proceed will be considered more reliable than information that is only collected for tax purposes.

    Example

    Alex purchases online security software from PC Protect. When Alex signed up for her account with PC Protect, she provided her home address in Australia. However, when paying for her software, Alex pays using her German credit card.

    This is the only information that PC Protect’s usual business systems and processes collects that is relevant to determining whether Alex satisfies the residency element.

    As the information available to PC Protect is not conclusive as to whether Alex resides in Australia or Germany, PC Protect must assess the quality and reliability of the information.

    Alex’s account with PC Protect indicates that she has an Australian home address, however the fact that she paid with a German credit card supports a conclusion that Alex currently resides in Germany. The credit card information is taken as being more reliable because it is necessary for the purchase to proceed.

    End of example

    Evidence from countries with similar tax requirements

    We will accept that your supplies are made to purchasers that are not Australian residents if all of the following apply:

    • your systems are set up to comply with a tax authority’s evidentiary requirements for working out residency (or similar term for VAT or GST purposes) that are similar to Australia’s
    • your systems indicate that your purchaser’s residency (or similar term) is outside Australia
    • evidentiary requirements for determining residency are publically available from the country with similar tax requirements.

    Tax authorities that have similar evidentiary requirements for working out residency for supplies are:

    • countries within the European Union
    • New Zealand, and
    • Norway.

    If you rely on the evidentiary requirements of these similar tax authorities, they apply only to the same type of supplies (ie digital supplies made in EU countries and Norway).

    For more information about the four approaches outlined here, see GSTR 2017/1 Goods and services tax: making cross-border supplies to Australian consumers.

    Working out the consumer element

    A purchaser is a consumer if they are either:

    • not registered for Australian GST
    • registered for Australian GST but do not purchase the imported services or digital products for use in their business.

    GST does not apply to a sale if the purchaser is not an Australian consumer. You can be sure that GST does not apply to a sale you make by obtaining:

    • the purchaser’s Australian business number (ABN), and
    • a statement they are registered for GST.

    Example

    Taxicity Co, a United States company that is registered for GST, sells a digital version of a software program to Australia.

    Brian Co, an Australian company that is registered for GST, downloads the digital version of the software product from Taxicity Co for business use. Brian Co provides Taxicity Co with its ABN and states it is registered for GST.

    Taxicity Co does not charge GST on the sale, as Brian Co is not an Australian consumer.

    End of example

    Information not supplied by purchaser

    If you do not directly obtain a purchaser’s ABN and a statement that the purchaser is registered for GST, you must use another method to determine if the purchaser is not an Australian consumer.

    If your knowledge of a purchaser or past dealings with them indicates they are a business and the purchase is relevant to that business, you can confirm they are registered for GST and have an ABN by searching for them on the Australian Business Register via the ABN Lookup tool.

    Example

    BGL Software is a United States company that sells cybersecurity software to AEK Industries, a large Australian business.

    BGL Software uses the Australian Business Register to check that AEK Industries is registered for GST.

    It is clear that AEK Industries is buying the software for a business purpose, given the nature of the product and the fact that the purchaser is a company (as opposed to a sole trader that might use the product for a private purpose).

    BGL Software determines that AEK Industries is not an Australian consumer. As this is the only supply that BGL Software makes to Australia, it determines that it does not need to register for GST.

    End of example

    See also:

    Last modified: 27 Sep 2017QC 53383