The purpose of issuing this consultation paper was seek input on the advice and guidance products operators of EDP’s and other might need to comply with the legislation. The ATO is seeking input to highlight areas that are unclear, cause difficulties in understanding or areas where there are practical compliance issues.
Digital supplies to Australian consumers – role of EDP’s
- Schedule 1 of the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Act 2016 (Amending Act) amended the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to impose goods and services tax (GST) on digital supplies and services. This change applies in working out net amounts for tax periods starting on or after 1 July 2017.
- The GST Act was amended to insert special rules for operators of electronic distribution platforms (EDPs) concerning the GST on the sale to Australian consumers of their digital products and services. Broadly the new rules ensure that the operator of an EDP is treated as having made supplies of digital products and services that are made through the EDP. Under these rules, the operator of the EDP, instead of the supplier, includes the value of the supplies in its GST turnover to determine whether it is required to register for GST. The operator also pays the GST on the supplies.
Differences from European Union (EU) approach
- Both the EU approach and the Australian approach have rules that deem an intermediary involved in key aspects of the supply to be the supplier. Under the EU approach, for each transaction in the supply chain, each entity is seen to have received, and on-supplied, the digital supply itself (reseller assumption). This approach does not necessarily follow the legal supply route.
- In contrast, under the Australian rules:
- An EDP is treated as the supplier[1] of an inbound intangible consumer supply[2] but this treatment does not extend to deeming the supplier to have acquired the digital content of the supply.
- The supplies provided by the operator of the EDP, such as agency or facilitation services are treated separately in accordance with the business agreements.
- Australian suppliers who supply digital products and services through the EDP are treated as the supplier.[3] However, this is unless the supplier and operator of the EDP agree in writing to treat the operator of the EDP as the supplier.[4] However, this agreement will not affect the treatment of supplies such as, facilitation or agency services by the operator of the EDP, to the supplier.
Low value goods – role of EDP’s
- Exposure Draft Bill – Treasury Laws Amendment (2017 Measures No 1) Bill 2017 proposes to amend the GST Act to ensure that GST is payable on supplies of goods valued at $1,000 (Australian) or less at the time of sale that are purchased by consumers and are to be imported to Australia. It is proposed that this change will collect GST from the supplier through the taxable supply rules and apply to working out net amounts for tax periods starting on or after 1 July 2017.
- The current $1,000 GST, duty and reporting threshold in relation to taxable importations of goods remains unchanged. For further information on how GST currently applies on goods imported into Australia see – GST on imported goods on ato.gov.au.
- The special rules for operators of EDPs described in paragraph 2 will also apply to supplies of low value goods made through the EDP. Consultation has been held by Treasury on this Exposure Draft Bill.
[ATO website – TDP 2016/1] [Related TT Article] [LTN 236, 6/12/16]