Many NZ Businesses to be affected by Australian Budget GST Changes

Tax Alert - June 2015

If a business makes supplies of services to Australian consumers, the new rules announced in the Australian budget are likely to have an effect.

Australia has recently announced the introduction of the ‘Netflix’ tax which applies Australian GST to supplies of all services, not just digital services, provided to Australian residents who are not registered (or required to be registered) for GST.

The new rules will apply from 1 July 2017 and will require a business to track who supplies are being made to.  If supplies are being made to Australian consumers, an Australian GST registration requirement may arise (the level of the registration threshold is still to be confirmed).  Australian GST at 10% would then need to be returned on the supplies.

Given that the GST component will be unrecoverable to the recipient, affected New Zealand businesses will need to consider whether to increase their prices by 10% or shoulder the burden of the GST component themselves, as well as the increased compliance costs.

Consultation is now open on the changes and closes on 7 July 2015.

Given the wide reaching nature of the changes, we encourage all New Zealand businesses to consider the effect and potential obligations that may be created.

If you would like to discuss the changes, please contact your Deloitte advisor.

Further information can be found here.

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