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Google has entered the Australian GST system

Something is changing in Google Land. From 1 November 2016, most of their products sold to Australian businesses will include GST.

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Google has announced that from 1 November 2016, most Google products sold to Australian businesses will include GST. Currently, all Google product purchases are coded as GST free but beginning November 2016, this will all change. If we are not responsible for your data entry, please make note of this so that you correctly claim your GST credits when the time comes. If you are a client of ours, rest assured that we will change the tax code in your accounting system to reflect Google’s GST change. See examples below of Google’s announcements about GST for 2 of their products, Google Adwords and Google Apps (now known as G Suite):

Google Adwords

Dear AdWords Advertiser,

This email is to inform you of important changes to the Advertising Terms affecting your AdWords account:

With effect from 1 November 2016, SG is assigning your advertising contract, including any amendments and related agreements (such as Service Agreements), to Google Australia Pty Ltd. This means that from that date, Google Australia Pty Ltd will be bound by the terms of the contract and will be providing the service to you and invoicing you for the service.

Google Australia Pty Ltd is required by law to charge 10% GST (Goods and Service Tax) on its services so you will see this appear as a new line item on your monthly statement from 1 November 2016.

Please contact your tax advisor if you have any questions regarding the tax consequences of this change.

Google Apps (G Suite)

Dear G Suite Customer,

This email is to inform you of important changes to the terms governing your G Suite account.

With effect from 1 November 2016, SG is assigning your agreement for the G Suite services to Google Australia Pty Ltd. This means that from that date, Google Australia Pty Ltd will be providing the G Suite services to you and will be invoicing you for those services.

Google Australia Pty Ltd is required by law to charge 10% GST (Goods and Service Tax) on its services so you will see this appear as a new line item on your monthly statements for usage from 1 November 2016 onward.

Please contact your tax advisor if you have any questions regarding the tax consequences of this change.

The assignment should not cause any interruption to your G Suite services. Your payment method will continue to be charged automatically as in the past.

Sincerely,

The G Suite Team, SG Google Asia Pacific

Why has this happened?

There have been some recent changes to GST law from 1 October 2016 relating to some transactions between overseas and Australian businesses. While some overseas businesses will now be exempt from registering for GST as a result of these changes, those who meet the following criteria, must enter the Australian GST system:

The non-resident enterprises will

  • need to be based in Australia for more than 183 days in a 12 month period and
  • have a GST turnover of $75,000 or more

If you are interested in reading the details about this GST law, go here.

Obviously, Google more than meets the above criteria and this is the reason for them now entering the Australian GST system.

This will soon become the norm for many other large overseas enterprises such as Amazon, Dropbox and Canva to name a few. My advice would be to take special notice over the coming months to your subscription invoices to see if GST begins to apply. I would think that most of these companies will send you emails announcing these sorts of changes similar to the examples from Google I have shared above, but none-the-less, it would be pertinent to pay special attention.

If you have any questions about changes to the GST status of your cross-border purchases, please get in touch.

 

  • So the next major overseas supplier to start charging GST is Adobe. Your Adobe products will include GST from 1st Dec 2016 (just in time for Christmas!). This will affect users of Photoshop, Premiere and Creative Cloud software.

  • And another big player has joined the “GST party”. Linkedin will begin charging GST to Australian customers from 1st January 2017. Here’s some info http://bit.ly/2h0SYfz