Recent GST Changes That Could Affect Your Business
Business Tax Update │September 2017
There are a number of changes to Business GST which will affect business owners this Financial Year, and may carry over into 2018. While they mainly affect import/export and online sales, and businesses in the food industry, it is important to check how these changes may affect you.
Please ensure to speak with your Accountant about your Business Tax and GST obligations.
These GST changes include:
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Simpler BAS
From 1 July 2017, small businesses now have less GST information to report on their business activity statement (BAS). This will be the default GST reporting method for small businesses with a GST turnover of less than $10 million.
The ATO automatically transitioned eligible small business’ GST reporting methods to Simpler BAS from 1 July 2017.
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GST on low value imported goods – Summary of reforms
The Government has passed the Treasury Laws Amendment (GST Low Value Goods) Act 2017 which will extend GST to low value imports of physical goods imported by consumers from 1 July 2018. In a recent press release, the Treasurer announced that Turnbull Government will level the playing field for Australian businesses by applying the GST to goods costing $1,000 or less supplied from offshore to Australian consumers from 1 July 2018.
Businesses that meet the A$75,000 registration threshold will need to take action now to review their business systems to ensure that they are able to comply.
The existing processes to collect GST on imports above $1,000 at the border are unchanged.
In summary, the reforms will:
- Make supplies of goods valued at A$1,000 or less at the time of supply connected with Australia if the goods are purchased by consumers and are brought into Australia with the assistance of the supplier;
- Treat the operator of an electronic distribution platform (EDP) as the supplier of low value goods if the goods are purchased through the platform by consumers and brought into Australia with the assistance of either the supplier or the operator;
- Treat re-deliverers as the suppliers of low value goods if the goods are delivered outside of Australia as part of the supply, and the re-deliverer assists with their delivery into Australia as part of a shopping or mailbox service that it provides under an arrangement with the consumer;
- Allow non-resident suppliers of low value goods that are connected with Australia to elect to access the simplified registration and reporting system; and
- Prevent double taxation.
Visit the ATO website for more information on the new GST on low value imported goods or speak to your local MAS Tax Accountant.
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Buy services or digital products from overseas?
From 1 July 2017, GST will apply to imported services and digital products.
Australian GST-registered business can avoid GST on these purchases from a non-resident supplier if they provide their ABN to the non-resident supplier and state that they are registered for GST.
The ATO has issued a reminder that if overseas suppliers sell imported services or digital products to Australian consumers and they meet the GST registration turnover threshold, they need to register for GST. They will meet the registration turnover threshold if their taxable sales to Australian consumers in a 12-month period are A$75,000 or more. Once registered, they will need to report and pay GST on sales to the ATO.
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GST – Simplified Accounting Methods determination for food retailers
The current GST accounting method for Food Retailers will be updated to reflect a more simpler and integrated process. The reform will involve five Simplified Accounting Methods (SAMs), including:
- Business norms: Apply standard percentages to your sales and purchases. This is the simplest method but can only be used by specified business types.
- Stock purchases: Apply the percentage of your GST-free purchases to your GST-free sales.
- Snapshot: Take a snapshot of your trading and use this sample to estimate your GST-free sales and GST-free purchases.
- Sales percentage: Work out what percentage of GST-free sales you made in a tax period and apply this to estimate your GST-free purchases.
- Purchases snapshot: Take a snapshot of your purchases and use this sample to calculate your GST credits. Available to restaurants, cafés and caterers only.
Visit the ATO website for further details or speak to your MAS Tax Accountant.
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GST – removing the double taxation of digital currency
From 1 July 2017 it will align the GST treatment of digital currency, such as Bitcoin, with money.
Digital currency is currently treated as intangible property for GST purposes. Consequently, consumers who use digital currencies as payment can effectively bear GST twice: once on the purchase of the digital currency and again on its use in exchange for other goods and services subject to GST.
This measure will ensure purchases of digital currency are no longer subject to the GST.
No changes to the income tax treatment of digital currency are proposed.
For more information or to make an appointment, please contact us below or call us on 1300 627 829
Source: TaxWise 2017
