With the purchase of digital products such as the streaming or downloading of movies, apps, and e-books and so on becoming exponentially more popular, it is timely to examine the recently-introduced law that applies GST to digital products and services imported by Australian consumers.
Effective 1 July 2017, GST now applies to digital products and other services imported by Australian consumers. Affected supplies that are caught by the new law include not only the streaming or downloading of movies, music, apps, games, e-books, online supplies of software, digital trade journal/magazine subscriptions and other digital products, but also offshore services such as website design, publishing services, consultancy and professional services (such as legal advice, architectural services and so on).
The concept of an “Australian consumer” is central to the new law. GST will only apply where the supply is imported by an “Australian consumer”. This requires that both of the following conditions are met:
- the recipient is an Australian resident for tax purposes, and
- either the recipient is not registered for GST or, if they are registered, the recipient does not acquire the supply for use in their business. Therefore, if the recipient is an Australian resident and makes the acquisition solely or even partly for business purposes, GST will not apply.