UNCLASSIFIED – The Australian GST Reforms

The Challenges of Digital Trade & Effective Policy Responses - Australian GST Reforms

Tim DyceDeputy CommissionerAustralian Taxation OfficeConference on the Digital Economy and Tax Authorities - Montréal May 2019

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Australian GST reforms: Overview

Legislative changes over the last

2-3 years have changed the risk

landscape and the administration

of GST and VAT globally:

• Multinational Anti-Avoidance

Law (2016)

• GST treatment of cross-border

transactions between businesses

(2016)

• Diverted Profits Tax (2017)

• GST on imported services and

digital products (2017)

• Low value imported goods

(2018)

The role of platforms

Early resultsA lower number of businesses have

been required to register.

This has enabled a greater opportunity

to support a small client base who are

new to the Australian GST system.

Over 1,500 overseas businesses,

including the major platforms, are

registered in the simplified GST system

for non-residents

Platforms are responsible for collecting

the GST, when goods or services are

sold through them.

Recent GST cross border changes

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Australian GST reforms: The role of platforms

Engaging with platforms and compliance

Platforms• Platforms are responsible for collecting GST on all

taxable sales made through them where they facilitate the supply where Australia is the place of consumption

Merchants• Merchants are only responsible when a platform is not

required to collect GST and Australia is the place of consumption

Re-deliverersLow value imported

goods only

• If a platform or a merchant has no knowledge that goods are destined for Australia, they deliver them elsewhere, and a consumer contracts to have those goods re-delivered to Australia, then the re-deliverer is responsible

•Identify•Law design•Confirm administrative approach

Engage

•‘Aware’ - ‘Prepare’ -‘Take action’

•Web content•Outline compliance strategy

Communicate•One-to-one support for platforms

•Registration, payment reporting

Support

•Communicate results•Follow-up•Assurance of non-compliance actions

Assure

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Australian GST reforms: Our experience

Engagement and Compliance

36% 85%

Australian GST reforms: revenue collected

GST collected by platforms on digital products and services • From 1 July 2017 to 30 September 2018:

• More than 500 businesses registered in the simplified

system including platforms

─ Platforms account for GST on taxable sales made

through them

• 36 per cent of revenue was collected by the top 5 platform entities, this includes

─ Fees to use the platform

─ Sales by third parties

• 85 per cent of revenue was collected by the top 30 entities (top 10 platforms and 20 merchants)

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$81m

$343m

49% 80%

Australian GST reforms: revenue collected

GST collected by platforms on goods under AUD1,000• From 1 July 2018 to 30 September 2018:

• More than 1,000 businesses registered including multiple platforms

─ Platforms account for GST on taxable sales made through them

─ This relieves many small businesses from having to register

• 49 per cent of revenue was collected by the top 5platform entities

• 80 per cent of revenue was collected by the top 30 entities (top 10 platforms and 20 merchants)

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$81m

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Australian GST reforms: Engagement

• Early engagement with platforms is important

─ Our increased understanding of business models has helped us better support impacted business including platforms

• Significantly reduced potential registration numbers

─ Increased opportunities to provide targeted one-to-one support

• Platforms want to comply and are complying

The Australian experience

8

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Australian GST reforms: Looking ahead

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Driving Willing Participation

ü Assuring the right amount of tax

ü Compliance activities ranging from education to support and review activities

ü Whole-of-tax payment thinking

ü Transforming through simplifying, automatingand integrating our administration of GST

International shift toward event based GST/VAT reportingCountries progressing toward mandatory electronic filing, include:• United Kingdom – making tax digital with integrated accounting software, dedicated VAT

account and digital lodgment.• Poland, Italy, Romania and Russia have introduced real-time GST/VAT data and

payments.• Brazil, Mexico and China – have implemented digital invoice requirements to substantiate

business transactions.

Simplify and improve compliance• Simpler GST reporting and bookkeeping requirements.• Look for opportunities to tackle risk at the source by applying withholding or real-time

systems to collect GST.

Automate

Integrate• Our journey has begun, we are realigning to whole-of-client focus.• Seamlessly integrate GST reporting into external systems and platforms used by clients.

• Look a for opportunities to leverage technology and third party data to pre-fill a GST return.

• For example using – e-invoicing, the Australian banking system’s ‘new payment platform’, block-chain or artificial intelligence.

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Questions?

UNCLASSIFIED - Australian GST reforms:

Thank you