The Federal Government has announced a range of changes to the Australian GST system with draft legislation expected to be released later this year.

Amongst other things, the proposed changes include: 

  • Changes to GST on cross border transactions

The Government plans to make changes that will lessen unnecessary GST payments by non-residents by changing the definition of whether a supply is ‘connected with Australia.’

This could in turn reduce the number of non-residents who must register for GST and improve the competitiveness of Australian suppliers.

  • Possible removal of GST-exemption on supply of going concerns and farmland sales

Currently, no GST is payable on the sale of farmland or the supply of going concerns.

However, under the proposal, a ‘reverse-charge’ would be introduced where the purchaser of the supply will need to pay GST and would be entitled to an input tax credit for the same amount thereby netting out to ‘nil’ in the same GST return. The concern is if stamp duty is payable on the GST inclusive amount.

An agreement in writing between both parties, who must both be registered for GST, will be required that confirms this outcome.

This is a brief snapshot of the proposed changes and we will await the release of further details with interest.