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Changes to GST for Digital Products

gst-on-digital-productsDo you use Google AdWords as part of your marketing strategy? Well, from 1 November 2016 Google AdWords customers will be billed for GST. More than 18 months ago, Malcolm Turnbull who was then the Communications Minister began the push for multinational companies to pay for GST on advertising that is booked through Australia.

Following on from this, the application of GST now extends to cross-border supplies of digital products and other services imported by Australian consumers from 1 July 2017. This includes digital products such as streaming or downloading of movies, music, games and apps as well as online services such as LinkedIn premium services and Google AdWords, as mentioned above.

The impact of this legislation is that a significant number of these supplies, which were previously free from GST, will now include GST as part of the purchase price. Companies can elect to charge GST on purchases prior to the commencement date of 1 July 2017, as is currently the situation with Google AdWords.

We recommend that clients who have overseas dealings in their business carefully look at any supply invoices to see whether GST is now being charged. This also ensures that you are not missing out on claiming these credits in your BAS.

Just a reminder also that if you are using rules or memorised transactions in Xero or MYOB, don’t forget to edit these rules to ensure that GST is now being claimed.

If you have any queries around these changes to GST, then please give us a call.