GST Matters – recent news

GST on offshore sales of hotel accommodation in Australia

Draft legislation has been released which would remove an exclusion from the $75,000 GST minimum turnover test for the offshore sales of hotel accommodation in Australia. The amendments would bring such sales into the Australian GST net from 1 July 2019.

See the Minister’s announcement and draft legislation here.

Announced in the 2018 Budget, from 1 July 2019 offshore sellers of hotel accommodation in Australia will be required to calculate their GST turnover in the same way as local sellers. Currently offshore sellers of Australian hotel accommodation are exempt from including sales of hotel accommodation in their GST turnover.

Sales that occur before 1 July 2019 will not be subject to the measure even if the stay at the hotel occurs after this date.

The unanimous agreement of the States and Territories will be required for the enactment of legislation.

See also: ATO confirms position on supplies of hotel accommodation in Australia and GST and GSTR 2018/1

GST on tampons to be removed

The Federal Treasurer has announced that the GST which currently applies to feminine hygiene products will be removed with effect from 1 January 2019. Amending the GST requires the agreement of the states, which the Treasurer has indicated has now been obtained.

A GST determination was issued on 26 November 2018 which takes effect 1 January 2019.

A list of GST–free health goods is here.

See further: Removing GST on feminine hygiene products

GST on new property sales to be remitted from settlement proceeds

The legislation has been passed by parliament to require purchasers to withhold and remit GST from settlement proceeds on the purchase of new residential premises and subdivisions.

See the Treasury Laws Amendment (2018 Measures No. 1) Bill 2018

The measures apply to contracts entered into from 1 July 2018, with pre-existing contracts excluded until 1 July 2020.

GST on low value imported physical goods

The Government has passed legislation to reduce the current tax-free threshold on online sales of imported physical goods from $1,000 to zero.

This measure will start on 1 July 2018.

The changes require non-resident suppliers with an Australian turnover of $75,000 or more to register and charge the GST.

GST on imported digital products and services

A 2015 Budget measure now enacted extends the application of GST to digital products and services obtained by consumers online from overseas suppliers.

The changes apply from 1 July 2017.

Foreign suppliers to Australian consumers (not through an enterprise in Australia) are required to register for GST if their turnover exceeds $75,000.

Under these measures, GST applies to anything other than goods or real property supplied to non-GST-registered Australian residents.

Note that these measures do not require GST-registered Australian businesses to pay GST on their imported inputs.

Where supplies are made by merchants through an Electronic Distribution Platform, GST liability falls on the Operator of the Electronic Distribution Platforms rather than the merchant.

The intention is that the affected suppliers and supplies will be subject to the same GST turnover, registration and payment rules as Australian domestic suppliers.

See further:

Non-resident businesses

The Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016 passed by parliament in May 2016 relieves non-resident suppliers of the obligation to account for GST on certain supplies, with any GST obligations shifted to Australian-based business recipients that are already registered for GST.

Non-residents and their resident agents can agree that the resident agent will be the liable entity for GST, despite the other amendments.

The measures are designed to prevent nonresident businesses being unnecessarily drawn into the Australian GST system through B2B transactions and come into effect from 1 October 2016.

See further:

Uber Loses in The Federal Court

News: 17 February 2017  The Federal Court has decided (consistent with the position advanced by the Tax Office) that Uber services are indeed “taxi travel” for gst purposes. The Court accepted that the concept of “taxi travel” as defined in s 195-1 of the GST rules should be construed broadly and not technically.

See also:

Barter transactions simpler

[News: Nov 2016]

A Practical Compliance Guideline (PCG 2016/18) released by the Tax Office potentially reduces GST compliance in relation to certain barter (countertrade) transactions.

Basically, direct barter transactions which are GST-neutral will not be the subject to ATO enforcement of the GST reporting requirements. Those requirements would otherwise require the production of tax invoices and the determination of GST value.

A proviso is that countertrade transactions are no more than “approximately 10% of the entity’s total number of supplies”.

See also:PCG makes GST barter transactions simpler

Bitcoins

As part of the 2017-18 Budget, the Government announced it would remove the double taxation of digital currency from 1 July 2017.  From 1 July 2017, digital currency will be treated just like money for GST purposes.

Legislation has now been approved by parliament.  See: Treasury Laws Amendment (2017 Measures No. 6) Bill 

Charities and GST-Free Supplies

Supplies by registered charities endorsed by the Tax Office are GST-free if provided for ‘nominal’ consideration.

In determining whether the consideration is nominal, the entity may (subject to qualification) use a market value or cost of supply method.

Where the market value method is used, the Tax Office provides market value benchmarks by which to determine whether a supply’s consideration may be considered ‘nominal’ (and hence GST-free) or not.

These reflect the application of Sec 38-250 of the GST rules

Under the market value method, the supply by an endorsed charity will be considered to be for nominal consideration if it is

  • less than 75% of the GST-inclusive market value for supplies of accommodation
  • less than 50% of the GST-inclusive market value for supplies other than accommodation.

Market value benchmarks categorised by expense type and geographical location are updated by the Tax Office on an annual basis.

Under the cost of supply method, the supply by an endorsed charity will be considered to be for nominal consideration if it is

  • supplied at less than 75% of the cost to the charity.

See further – guidelines.

See market value information here.

See calculation methodologies here.

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This page was last modified 2019-10-10