The new financial year is almost here and it will bring with it some significant GST changes.

Simple GST Reporting for Small Businesses

A very important change for small businesses is the simplified GST reporting called “Simpler BAS”. Simpler BAS applies from 1 July 2017 and is designed to make the BAS preparation process easier for small businesses.

All businesses with an estimated annual GST turnover of less than $10 million will be eligible for Simpler BAS. With Simpler BAS, eligible businesses will only need to report Total sales, GST on sales, and GST on purchases on their BAS. Export sales, GST-free sales, Capital purchases, and Non-capital purchases will no longer need to be reported.

This change will reduce the complexity of GST bookkeeping and reporting and it will be much easier to classify GST transactions in bookkeeping software.

There are no changes to the BAS reporting cycles and deadlines, and the ATO have confirmed that from 1 July 2017 they will also accept BAS for periods prior to 1 July 2017 prepared using the new Simpler BAS reporting.

Software providers like Xero and MYOB are currently working on changes to their software to support Simpler BAS reporting for small businesses.  However, the changes mean that from 1 July 2017 all transactions can be either classified with a GST tax code or a N-T (MYOB) or BAS Excluded (Xero) tax code.

GST on Low Value Imported Goods

Another significant GST change, which will only impact on consumers, is GST being imposed on imported goods under $1,000. This change was intended to commence on 1 July 2017, however, the government amended the legislation to defer the start date to 1 July 2018.

Currently, these goods are not subject to GST as the supplier is not considered to be making sales connected to Australia for GST purposes and the goods are non-taxable importations resulting in no GST being imposed on the consumer importing/purchasing the goods.

From 1 July 2018, the goods will remain non-taxable importations resulting in no GST being imposed on the consumer by Australian Customs, however, the sale of the goods by the supplier will become connected with Australia and the supplier will be liable to register for GST and charge GST on the sale of the goods if the supplier’s annual GST turnover is more than $75,000.

GST on Foreign Services to Australian Consumers

Under current GST law, GST only applies on services if the service is done in Australia or is made through an enterprise carried on in Australia.  From 1 July 2017, the GST law is changing to make services subject to GST if the recipient of the service is an Australian resident, is not registered for GST, and if GST registered, is not making the acquisition in relation to an enterprise that the entity carries on.

This effectively means that services by foreign businesses to Australian consumers will be subject to 10% Australian GST resulting in an increased cost of 10% to the Australian consumer. Examples of these services are digital products i.e. downloading or streaming movies, music, apps, games, e-books, and other services like consulting and professional services.

Where the services are provided via an electronic distribution platform, the platform operator will be liable to register for GST and collect and pay the GST on behalf of the foreign service providers.