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  • Our compliance approach to imported services and digital products

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

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

    On this page:

    Identifying non-resident businesses affected by the new law

    We have utilised third-party data and undertaken significant internet profiling to identify non-resident businesses we believe are affected by the law. In some cases, we have used tax treaties with other countries to confirm these business details. As such, you may receive a letter or phone call from us telling you about the new law. This is to raise awareness and provide links to more detailed information so you can 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:

    Our approach to compliance during the first year of operation

    In the first 12 months of the law, we will take a measured and practical approach to compliance. If you have taken reasonable steps to meet your legal obligations and still find that you are not fully compliant, we will support you. For example, if you can show you have taken reasonable steps to comply, such as setting up systems, but have had a system failure, no penalty will apply.

    Compliance approach after the first year of operation of the law

    After the first year, we will undertake our usual enforcement procedures if a non-resident supplier has not registered for GST or is not remitting GST on its sales to Australian consumers. We will:

    • 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 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
    • work with the tax authority in your country to collect the debt.

    Apply GST correctly to your sales

    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, or
    • 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 toolExternal Link on the Australian Business Register website to check ABNs.

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

    See also:

    • For information on identifying an Australia consumer, see GSTR 2017/1 Goods and services tax: making cross-border supplies to Australian consumers

    Record keeping

    Your must keep records of all transactions you make to Australian consumers and these 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 paying GST

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

    • claiming to be a GST-registered business, and
    • 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 penalties apply as follows:

    • 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, and
    • 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 share information to identify the legal entity behind e-commerce websites and communicate with them – for example, bilateral tax treaties and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

    Financial data

    Advances in our data-matching technology mean we are fully capable of keeping track of the digital economy. We currently obtain more than 650 million pieces of data a year from third-party 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 think someone may be deliberately evading tax, you can report it to us confidentially online.

    See also:

    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: 06 Jul 2017QC 52821