Paying GST on digital products sold in Australia
Effective July 1, 2017:
Under the new Australian GST law, any seller of digital goods/services to consumers in Australia will be required to register for GST if the sales made in a 12 month period are A$75,000 or more. Once registered you will need to report and pay GST to the ATO on sales made after July 1, 2017.
This new law applies to the sales of digital products and services. Here are a few examples:
- Downloaded movies, games, ebooks
- Legal and educational services
How to register
We will update this article as more information becomes available about the new system. You will be able to access a service on the ATO’s website soon and do the following:
- Register electronically
- Logde and pay GST quarterly
What you need to know
- The GST rate in Australia is currently 10% so 1/11th of the amount you charge for sales of digital products/services to Australian consumers will be the GST amount that you must pay
- You do not need to provide a tax invoice to your customers
- You are not able to claim tax credits
How do I know if I am dealing with an Australian consumer?
- Take steps to obtain that information or by using the info captured in your business systems
- By obtaining an Australian Business Number (ABN) and a statement from your customer that they are GST registered
There is a transitional rule in place that applies to digital items/services delivered prior to July 1st but extends beyond that time. An example of this would be a 12-month subscription where goods or services are delivered every month. If you deliver a service/digital item like a subscription after July 1st, even if it began prior to this date, the portion delivered after will be subject to GST and would be payable in the first tax period after July 1.