What You Need to Know About the Changes to the GST
- August 9, 2017
- Posted by: Quarles Business and Financial Strategists
- Category: Tax and Accounting
What you need to know about the changes to the GST
The Goods and Service Tax (GST) is a tax of 10% on most goods, services and other items sold in Australia. It was introduced on the 1st of July 2000 by the Howard government. While in the past there have been proposals to increase the GST to 15% or to remove certain items from the list that GST applies to, the GST has remained relatively unchanged. That is until now.
The government has announced that as of 1st of July 2017 new GST legislation will be introduced. The changes will have different effects towards both individuals and businesses. Not sure what the changes are or how they will affect you? Keep on reading to find out more.
What is changing?
The first change being made is that imported goods valued at less than $1,000 will now have the GST applied, which it currently does not apply to. Secondly is that the GST will now apply to electronic goods and services bought online and digital streaming services.
GST on imported goods.
With the GST now applying to imported goods valued at less than $1,000 international vendors who sell to Australians and make more than $75,000 doing so, will be required to register and charge GST.
As most stores online are not Australian, and their products generally are below $1,000, they would previously not have been required to charge GST. This means with the changes you will be paying 10% more for items purchased online.
GST on digital goods and services
This change is commonly being referred to as the “Netflix Tax”. It will see you now paying the additional 10% for the following:
- Goods without a physical component such as music, movies, games and eBooks.
- Services provided in an electronic capacity, such as those of architects, artists designers and more.
- Streaming services, paid content subscriptions and printable electronic tickets all count as digital goods and services.
You should expect to see an increase in cost for any items that fall into the above categories and more. This tax is a broad change that blankets all vaguely defined digital, electronic and online businesses. This means it will be applied to a lot more than you may first expect. These businesses will likely not be able to absorb the tax and instead will pass the cost on to the consumer in a price increase.
No matter if you are a business owner or an individual, the changes to the GST tax will affect everyone in some way. Want to know how it will apply to you specifically? Give the experts at Quarles a call today.