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  • Our compliance approach to imported services and digital products

    From 1 July 2017, goods and services tax (GST) has been applied to cross-border supplies of imported services and digital products sold to Australian consumers.

    If you are a non-resident supplier affected by this law change, make sure you know your obligations and how to comply.

    On this page:

    Identifying affected non-resident businesses

    We have used third-party data and undertaken significant internet profiling to identify non-resident businesses we believe are affected by this law. In some cases, we have used tax treaties with other countries to confirm these business details.

    You may receive a letter or phone call from us telling you about the law. This is to raise awareness and provide links to more detailed information to help you comply with the law.

    We have also developed a new simplified GST system, where non-residents can register, report and pay in a fully secure online system.

    See also:

    Compliance approach

    We will take action if a non-resident supplier has not registered for GST or we suspect is not paying GST on its sales to Australian consumers. In these circumstances the action we take is to:

    • register the non-resident supplier
    • assess the amount of GST payable and apply a penalty.

    This is specifically required by Australian tax law. Compliance audits and risk reviews are part of this process.

    If you have not contacted us after we have written to or called you, we can:

    • calculate your business liability (using third party information – for example, bank information) from the date of commencement of the law (1 July 2017)
    • apply the general interest charge (GIC) to outstanding amounts from earlier periods
    • raise and issue a default assessment with an additional 75% administrative penalty
    • use available debt collection procedures and where treaties allow, work with the tax authority in your country to collect the debt.

    Apply GST correctly

    You must apply GST to the amount charged for your supplies of imported services or digital products to Australian consumers.

    An Australian consumer is an Australian resident who:

    • is not registered for Australian GST
    • if registered, does not purchase the imported service or digital product for business purposes.

    You don’t have to include GST in the amount charged for cross-border supplies of digital products and other services made to either:

    • GST-registered Australian businesses
    • residents of other countries.

    To work out if you are dealing with an Australian consumer you need to:

    • use information captured in your business systems or obtain information to reasonably identify Australian residents
    • exclude Australian businesses by obtaining an Australian business number (ABN) and a statement that they are GST registered.

    Use the ABN Lookup tool on the Australian Business Register website to check ABNs.

    Your systems and accounting reports must be able to identify these transactions.

    See also:

    Record keeping

    You must keep records of all transactions you make to Australian consumers. Records must be:

    • in writing (paper or electronically)
    • in English or a form that we can readily access and convert into English
    • kept for five years.

    These records must provide evidence of your total sales into Australia and how you have calculated the GST payable on these for every tax period.

    We may impose penalties if you don’t keep correct records.

    See also:

    Australian consumers that provide ABNs to avoid GST

    Some Australian consumers may incorrectly represent themselves to avoid paying GST by:

    • claiming to be a GST-registered business
    • giving you an ABN that does not belong to them.

    This is a serious and deliberate breach of the law by the Australian consumer and the following penalties apply.

    • 60 penalty units (currently $10,800) if the statement was intentionally false or misleading.
    • 40 penalty units (currently $7,200) if the statement was found to be reckless.
    • 20 penalty units (currently $3,600) if the false or misleading statement resulted from a lack of reasonable care.

    Information from other countries

    We have arrangements with other countries to request information to identify the legal entity behind e-commerce websites, for example, bilateral tax treaties and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

    We can use available tax treaties to engage with your tax authority to:

    • advise them that your business has not complied with international tax obligations
    • request information about your business including records held by financial institutions
    • request assistance to collect the debt resulting from our assessment of your tax liability and penalty.

    Financial data

    Advances in our data-matching technology means we are capable of keeping track of the digital economy. We currently source third-party transactional data from a number of sources, including bank records.

    We can obtain third-party credit card transactional data for purchases made on the internet from non-resident businesses. This data can be used to make an assessment of GST payable.

    Tell us if you suspect non-compliance

    If you know of, or suspect phoenix, tax evasion or shadow economy activity, you can report it to the Tax Integrity Centre by:

    • completing the tip-off form (the form is also available in the 'Contact us' section of the ATO app)
    • phoning the Shadow Economy hotline on 1800 060 062.

    Anti-avoidance provisions

    We can take serious action if we believe the main:

    • purpose of an entity's structure or transactional arrangements is to obtain a GST benefit from the scheme
    • effect of the scheme is to get a GST benefit directly or indirectly.

    Your rights and obligations

    Even though your business is based offshore, you have the same rights and obligations as Australian domestic businesses.

    See also:

      Last modified: 10 Jul 2019QC 52821