Australia

2017 - 2018 Australian Federal Budget: a mixed bag - GST developments

This year's Federal Budget has shown a change of focus with a mixed bag of reform measures. Measures relating to GST are:

Low value imports

The Budget foreshadows the imposition of GST on low value importations where the relevant value is less than AUD 1,000. The Senate Economics Legislation Committee has handed down its report into the proposed scheme for taxing low value importations of goods. The report recommends that the change be delayed until 1 July 2018, pending a further review.

Property

From 1 July 2018, the Government will require purchasers of newly constructed residential properties or new subdivisions to remit GST on the sale directly to the ATO as part of the property settlement. Under the current law (where the GST is included in the purchase price and the developer remits the GST to the ATO), it is understood that some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs.

Digital currency

The GST treatment of digital currency (such as Bitcoin) will be aligned with the GST treatment for money from 1 July 2017.

Digital currency is currently treated as intangible property for GST purposes. Consequently, consumers who use digital currencies as payment can effectively bear GST twice: once on the purchase of the digital currency and again on its use in exchange for other goods and services subject to GST.

This measure is intended to ensure purchases of digital currency are no longer subject to the GST. Removing double taxation on digital currencies is intended to remove an obstacle for the Financial Technology (Fintech) sector to grow in Australia.

Precious metals

The GST law is to be amended to give effect to changes that were announced on 31 March 2017, and take effect from 1 April 2017, for dealings in precious metals. The changes will provide that entities buying gold, silver and platinum that have been supplied as a taxable supply for GST purposes will be required to apply a "reverse charge", that is, they will remit the GST to the ATO instead of the seller. Changes are also to be made to clarify that gold, silver and platinum are not second-hand goods (also see details in the next item).