- GST law changed on 1 October 2016.
- Legal services may be GST-free in a broader range of circumstances.
- The reforms potentially benefit both non-resident clients and law firms.
The A New Tax System (Goods and Services Tax) Act 1999 (‘GST Act’) was recently amended to better address cross-border supplies made in a business-to-business (‘B2B’) context. One aspect of the reforms, which commenced on 1 October 2016, will impact the circumstances in which legal and other professional services supplied to non-residents are GST-free (i.e. not subject to GST).
It should be noted at the outset that these B2B reforms are separate to the GST reforms impacting inbound intangible supplies made to Australian consumers from 1 July 2017. Those reforms, often referred to as the ‘Netflix Tax’, will apply in a business-to-consumer (B2C) context.