15 February 2011

Simplyfing the GST on Cross-border Transactions

As part of the ongoing reforms by the Gillard Government to simplify Australia's tax system, Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, today released a discussion paper about reforms to how the GST is applied to cross-border transactions.

"These tax changes will simplify the design of the GST cross-border rules. It will ensure Australia's GST system does not unnecessarily draw in non-residents, while ensuring the integrity of the existing GST tax base," Mr Shorten said.

The Government announced the changes in the 2010-11 Budget following the Board of Taxation's review of the application of GST to cross-border transactions.

The consultation paper provides further information on the announced changes that will:

  • Limit the 'connection with Australia rules' in certain circumstances
  • Expand the reverse charge rules to goods
  • Extend GST-free status to supplies made to a non-resident but provided to registered entities in Australia
  • Remove the requirement for a non-resident to register for GST when they are not making any taxable supplies in Australia.

The changes will apply from 1 July 2012.

Several previously announced changes do not require legislative amendments. The ATO will consult with industry directly on each of these, including:

The best way to make changes to the registration process for non-residents

Improve taxpayer awareness and education about which entities are entitled to claim back GST on the importation of goods.

"I encourage stakeholders to provide feedback on the design of these GST cross-border measures. Stakeholder feedback plays an important role in designing legislative changes and all submissions will be considered in developing legislation and explanatory material," Mr Shorten said.

The consultation paper is available on the Treasury website www.treasury.gov.au. Submissions are requested by close of business on Thursday, 31 March 2011.

Submissions received in response to the Board of Taxation's review of the application of GST to cross-border transactions are also available from the Board's website www.taxboard.gov.au

A further round of public consultation on exposure draft legislation and associated explanatory materials is planned for later in 2011.