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Australia - Indirect tax guide

Australia - Indirect tax guide

Explore the requirements and rules that apply to indirect taxes in Australia.

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General

Type of indirect tax:

GST.

Standard rate:

10 percent.

What supplies are liable to the standard rate?

Any form of supply that is made for consideration in the course or furtherance of an enterprise, is connected with Australia1 and is provided by an entity that is either registered or required to be registered.

From 1 July 2017, GST applies to supplies of digital products and other services from offshore suppliers to Australian consumers.

From 1 July 2018, GST applies to supplies of low-value imported goods (i.e. 1,000 Australian dollars (AUD) or less) for which the supplier, the electronic distribution platform or the redeliverer is liable to register and remit GST.

Are there any reduced rates, zero- rates or exemptions and if so, what do they apply to?

There are no reduced rates.

The GST payable on supplies of long term accommodation in commercial residential premises is calculated on a concessional basis, the specific methodology depends on whether the price is charged on a GST-inclusive or GST-exclusive basis and whether premises are predominantly used to provide long term accommodation.

GST-free (zero-rated) supplies include exports (of goods and services); some food products; most medical and health products and services; most educational courses; child care; religious services; water; sewerage and drainage services; and international transport.

Input taxed (exempt) supplies include financial supplies; residential rent and sales of residential premises; upon election, long term accommodation in commercial residential premises; and fundraising events conducted by charitable and not-for-profit entities.

VAT/GST registration

Who is required to register and what is the threshold?

An entity that is carrying on an enterprise whose current or projected annual GST turnover is AUD75,000 or more (excluding GST).

Non-profit and charitable bodies are not required to be registered unless their current or projected annual turnover is AUD150,000 or more (excluding GST).

Taxi operators (including ride share drivers) are required to be registered, regardless of their annual turnover.

Is voluntary registration possible?

Yes, provided you ‘carry on an enterprise’.

Is voluntary registration available for an overseas company or a fiscal representative?

Yes, provided you ‘carry on an enterprise’.

VAT/GST compliance

What is the typical frequency of returns?

Usually, quarterly. Where a business’ annual GST turnover exceeds AUD20 million, monthly returns are required (GST-registered entities can voluntarily register for monthly lodgment). In very limited situations, an election can be made to lodge annually.

VAT/GST recovery

Are there any items that a registered business cannot recover GST on?

An entity cannot recover GST on acquisitions of a private or domestic nature; acquisitions that relate to making input taxed (exempt) supplies, such as financial supplies or residential rent (although there are exceptions to this rule); certain acquisitions where income tax deductions are not allowable (e.g. entertainment expenses); and acquisitions of freehold interests in land, stratum units or long-term leases subject to the GST margin scheme.

Can an overseas company recover GST if it is not registered?

No.

How long does it typically take to obtain a GST refund following a return filing?

If all required information has been provided to, and lodgments are up-to-date with, the Australian Taxation Office (ATO) will generally process refunds within a month (subject to any delays resulting from compliance audit or review activities).

Invoices

Are there specific requirements for the content of invoices to be considered valid for GST purposes?

Yes, among other requirements, an invoice should broadly contain the supplier’s identity and Australian Business Number (ABN); the recipient’s identity or ABN (for supplies with a total price of AUD1,000 or more); a description of the supply; the date the invoice was issued; and the amount of GST payable. An invoice must satisfy the requirements in order to allow for a claim for input tax credits.

Special indirect tax rules

Does a reverse charge or indirect tax withholding mechanism apply?

Yes, a non-resident supplier can, with the agreement of the Australian GST registered resident recipient, elect to reverse charge the supply, subject to other requirements.

A compulsory reverse charge mechanism can also apply to the supply of offshore intangible supplies to an enterprise that would not be eligible for a full input tax credit (e.g. certain acquisitions from offshore by banks).

From 1 October 2016, certain supplies of services and intangibles from non-resident suppliers to Australian-based business recipients are no longer connected with Australia, potentially triggering a greater application of the reverse charge mechanism to Australian businesses.

Rulings

Is it possible to apply for formal or informal advance rulings from the tax authority?

Yes, an entity may apply for a private binding ruling. Informal rulings are not issued.

Other indirect taxes

Are there any other indirect taxes that apply in the jurisdiction?

Other indirect taxes include the following:

  • customs duty
  • state taxes, including stamp duty and land tax
  • wine equalization tax
  • luxury car tax
  • excise duty (e.g. on fuel and alcohol).

Contacts

Michelle Bennett
KPMG Australia
T: +61 (3) 3 9288 5910
E: mabennett@kpmg.com.au

Footnote

1 With effect from 1 July 2015, the term ‘Australia’ was replaced with the term ‘indirect tax zone’. The scope of the new term remains the same as the now-repealed definition of ‘Australia’. For readability, the term ‘Australia’ is used in this document to refer to the ‘indirect tax zone’, as defined in subsection 195-1 of the A New Tax System (Goods and Services) Tax Act 1999 (Cth).

Disclaimer

All information within this guide is provided by KPMG professionals in Australia and based on information available as of September 2019.

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