Australian Google AdWords customers are preparing to be hit with the goods and services tax (GST) for the first time after Google sent emails to account holders on Tuesday to give notice that their accounts will be billed through Google Australia from November 1.
The change comes more than 18 months after then Communications Minister Malcolm Turnbull started the push for multinationals to pay GST on advertising booked through Australia.
While there was some confusion with the initial announcement as to whether GST will be inclusive or exclusive, we can now confirm that GST will be exclusive.
This means that, if you are paying Google directly for your click spend (e.g. via credit card), your AdWords spend will remain as is and Google will be charging an extra 10% on top of your current spend as an additional line item.
If your business is registered for GST, not much is going to change (except for cash flow of course). You can still claim credits for this GST at BAS time.
If your business is not registered for GST, then this will likely hit your hip pocket.
It’s my recommendation that you inform your tax consultants/finance department of these changes so they can be prepared for this come BAS time.