Amazon prepares to charge GST for non-business cloud customers

New GST measures kick in on 1 July

Non-business customers of Amazon Web Services will soon be forced to pay the GST, the cloud computing company said today.

The government last year unveiled legislation to impose the GST on digital services provided to Australians by overseas suppliers. The measure, dubbed a ‘Netflix tax’, finally passed the Senate in March this year.

The move is “an important part of the government’s program to level the playing field for Australian businesses and restore integrity to Australia’s tax system,” Treasurer Scott Morrison said when introducing the legislation into the House of Representatives in February 2016.

The treasurer said the government is committed to a tax system “that ensures that those businesses that are operating in this country and are delivering services and products in this country meet the expectations of the Australian public in terms of the taxes that should be paid on the delivery of those goods and services in this country.”

The measure takes effect on 1 July this year.

AWS has written to Australian users of its services outlining the changes.

“GST will not be added on cloud services provided to Australian business customers who are GST registered,” the email to customers states. “Amazon Web Services, Inc will charge GST, and issue corresponding tax invoices, on certain Amazon Chime, Amazon Connect, and Snowball services supplied to business and individual customers.”

Business customers seeking to avoid the imposition of GST on the cloud services they purchase will need to register their ABN with AWS.

“Provided you have uploaded a valid ABN, Amazon Web Services, Inc. will not apply GST on most future purchases of taxable services under the relevant account,” the email states.

Amazon’s online retail arm is currently fighting a separate government proposal related to the GST.

The government has introduced a bill that would force Amazon, eBay and other international online marketplace operators to collect the tax on low-value purchases by Australians.

Currently, GST is not payable on goods that cost less than $1000 purchased by individuals and imported into Australia. Treasury Laws Amendment (GST Low Value Goods) Bill 2017, which implements a measure announced in the 2016-17 budget, is expected to boost revenue by $300 million over three years by eliminating the zero GST threshold.

If the bill is passed, the operator of an “electronic distribution platform” will be treated as the supplier of low value goods, if the platform is used to purchase the goods — affecting companies like Amazon and eBay.