Applying GST to low value goods imported by consumers
On 4 November 2016, the Treasurer announced the release of exposure draft legislation to give effect to the 2016-17 Budget measure to apply Goods and Services Tax (GST) to low value goods imported by consumers. Under this measure, from 1 July 2017, overseas vendors, electronic distribution platforms and goods forwarders will be required to account for GST on sales of low value goods to consumers in Australia if they have GST turnover of AUD75,000 or more. Submissions can be made until 2 December 2016.
Practical Compliance Guideline issued on GST and countertrade transactions
The ATO has released Practical Compliance Guideline PCG 2016/18 on GST and countertrade transactions. The Guideline discusses the Commissioner's compliance approach to an entity that has entered into a countertrade transaction (otherwise known as `barter' or `non-monetary' transactions) as part of carrying on its enterprise, provided that countertrade transactions account for no more than approximately 10 per cent of the entity's total number of supplies.
As outlined in the Guideline, the Commissioner will not apply resources to verify compliance with GST reporting obligations for a countertrade transaction in certain circumstances. The Guideline does not apply to countertrade transactions between members of a `barter scheme' conducted by a barter or trade exchange.
GST on Contract for sale of land
In A & A Property Developers Pty Ltd v MCCA Asset Management Ltd, the Supreme Court of Victoria held the purchaser of land was not liable to pay GST in addition to the purchase price of land stated in the contract. The Court considered the construction of the relevant provisions in the contract and held the inclusion of the letters `GST' in the relevant box in the contract did not trigger the mechanism for the GST to be added to the purchase price (as the contract required the words 'Plus GST' to be included). The Court stated the words of commercial contracts are to be interpreted in accordance with their commercial purpose, and there was no ambiguity in this contract justifying reference to surrounding circumstances.