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Australian GST: Does your New Zealand business need to register?

In Budget 2023, the Australian Tax Office (ATO) were given AU$588.8million over four years to pursue a range of activities to promote GST compliance. With ATO’s funding boost, its more important than ever that New Zealanders carrying on a business or other form of enterprise that involves supplies being made to recipients in Australia need to keep the requirement to register for GST in Australia front of mind.

This could include, for example, selling goods or digital products, leasing or renting out real or non-real property located in Australia, providing advice or information, providing services, or granting or transferring rights.

Australian GST is ‘similar but different’ to GST in New Zealand, so in this article we provide an overview of some key matters to consider when determining if your business may have Australian GST obligations.

It's important to note that the guidance provided in this article is general in nature, and the specific circumstances and nature of an enterprise, the supplies being made, and the recipients, may all impact the application of the registration requirements.

Australia’s GST

Australia’s GST is a broad-based tax of 10% on most goods, services, and other things sold or consumed in Australia. If a New Zealand entity is required to register for Australian GST, or voluntarily chooses to do so, the entity needs to lodge periodic GST returns and remit to the Australian Taxation Office (ATO), one-eleventh of the price for any supplies that are taxable.

The requirement for a New Zealand entity to register can arise in cases where supplies are made by the entity through an enterprise the entity carries on (through a fixed or other place) in Australia, or where supplies are made through an enterprise the entity carries on through a place in New Zealand (or anywhere else outside Australia).

A New Zealand entity carrying on an enterprise would be required to register for GST in Australia if its ‘GST turnover’, meets or exceeds AUD 75,000 in a 12-month period (considered on a current and future basis). Broadly, GST turnover includes income from supplies that are ‘connected with’ Australia, other than:

  • Supplies that are ‘input taxed’ (e.g., financial supplies, lease of residential premises);
  • Any ‘GST-free’ supplies (e.g., Basic foods, medical aids/appliances, health goods, etc.) which are not made by the entity through an enterprise that the entity carries on in Australia;
  • Supplies made for no consideration; and
  • Supplies that are made other than in connection with the entity’s enterprise.

Additionally, an entity carrying on an enterprise can register for GST voluntarily if its annual GST turnover is below AUD 75,000.

A supply is ‘connected with' Australia if:

  • In the case of goods being supplied, the goods are delivered or made available to the recipient in Australia, the goods are removed from Australia, or the supply involves the goods being brought to Australia and the supplier imports them into Australia;
  • In the case of low value imported goodsi (LVGs), the LVGs are supplied from offshore to a ‘consumer’ii in Australia;
  • In the case of real property being supplied, the real property, or the land to which it relates, is in Australia; and
  • In the case of anything else being supplied:

    1. The thing is done in Australia;
    2. The supplier makes the supply through an enterprise that the supplier carries on in Australia;
    3. Neither a) or b) applies, the thing is a right/option to acquire another thing, and the supply of the other thing would be connected with Australia (e.g., a travel package for a trip to Tasmania that is supplied by a travel operator in New Zealand); or
    4. The recipient is an ‘Australian consumer’ iii.

The following table provides a summary of the treatment generally applicable to various forms of supply that New Zealand entities may make to customers in Australia. The table is indicative only, and is not comprehensive.

New Zealand entities generally need to register for Australian GST on the standard basis, unless they are eligible to register under the simplified GST registration arrangements. This choice is available to entities making offshore supplies of LVGs to ‘consumers’ in Australia or supplies of digital products, services, etc. to ‘Australian consumers’. However, simplified GST registration is not available for non-resident businesses that import goods and store them in Australia before selling them online, directly, or through an EDP.

Standard registration involves specific requirements and obligations including in relation to proving identity, but permits GST input tax credits to be claimed. Simplified registration is straightforward, but does not allow claiming of input tax credits.

It is important to note that failure to register when required or other non-compliance with GST obligations can result in penalties being applied by the ATO.

Understanding the GST requirements for a New Zealand entity operating in Australia is essential to effectively managing compliance with the Australian GST law.

The requirement to register for GST is determined by factors such as turnover from relevant supplies, the nature of business activities undertaken, and supplies being ‘connected with’ Australia. Additionally, different rules apply to the supply of goods, services, and other things, so it's important to assess whether supplies being made to Australian customers are subject to GST or qualify for exemptions.

Seeking professional advice tailored to your specific circumstances is highly recommended - to help navigate the complexities of the GST rules and meet GST reporting and payment obligations. Adherence to the Australian GST law, and effective management of GST responsibilities, will assist New Zealand entities to maintain smooth operations in the Australian market.

For more information, please contact your usual Deloitte advisor. 

iGoods with a customs value of AUD 1,000 or less.

iiA customer who is not registered for GST or, if registered, the recipient’s acquisition is not for the purpose of an enterprise the recipient carries on.

iiiAn Australian resident who is either unregistered or, if registered, the entity’s acquisition is not acquired for the purpose of an enterprise the entity carries on.

ivThe GST treatment specified for each of the categories in the table is subject to any exception that may apply to a specific supply that is made, such that a different GST treatment may apply to that thing. For example, while most goods supplied in the ‘Offshore supply of LVGs to a consumer in Australia’ category will be taxable supplies, an offshore supply of a LVG that is a GST-free health good (e.g., sunscreen with an SPF of 15 or more), or a medical aid or appliance (e.g., a walking frame) will be a GST-free supply. Where such exceptions apply, there may be an impact on whether such supplies count towards the supplier’s GST registration turnover.

July 2023 - Tax Alerts

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