New hotel law hits resorts

Offshore companies selling hotel bookings in Australia will have to to pay the same GST as Australian companies.

A draft released by Treasury explaining the impact of the law has been released and is now open for public consultation.

The legislation removes the exemption that has allowed offshore sellers not to count sales of hotel bookings in Australia towards their $75,000 GST turnover threshold.

Treasurer, Scott Morrison said the change will increase government revenues.

“The measure will apply to sales made on or after 1 July 2019 and is estimated to increase GST payments to the States and Territories by $15 million over the forward estimates,” Mr Morrison said.

Mr Morrison said this would level the playing field for local businesses.

It will be a significant piece of legislation, following on from the Government’s decision to extend the GST to digital products and other services from 1 July 2017 and to low-value imported goods from 1 July 2018.

These measures are all aimed to increase the money coming in to the government coffers.

“The size of the GST pool has grown substantially from $24.4 billion when the GST was introduced two decades ago, to $67.3 billion this year, accounting for around 25 per cent of State and Territory revenue,” Mr Morrison said.

“Our measures to grow the GST base, including enforcing the payment of GST on property transactions and applying the GST to digital products and services, and low-value goods imported to Australia, are forecast to increase GST receipts by more than $2 billion in 2018–19, and more than $6.5 billion over the four years to 2021–22.”

Because it is the GST, which is distributed to the states, the legislation will require the unanimous agreement of the states and territories before it can be enacted. 

Submissions for the two page exposure draft close on 9 August.

Leon Gettler - 24th July 2018