Google recently sent out an email to all business owners that use Google AdWords stating that as of November 1st, 2016 all Google AdWords will be charged GST. GST has not been charged before to any business using AdWords to advertise until now.
What is GST?
This simply means Goods and Service Tax (GST) — an indirect tax that is levied on the supply of goods and services. GST is levied on all points of sale and has now been introduced to Google AdWords.
What does this mean for your business?
This comes down to whether or not your business is registered for GST. If you are registered, your cash flow is not affected as you can claim the GST amount back when you lodge your business activity statements (BAS). If your business is not registered, you will pay 10% more for your Google adverts and cannot claim GST back.
An important thing all business owners should note is that whatever your current Google AdWords budget is at present, it will stay the same — GST is added to your account after your advert has been shown.
The Google AdWords team sent out an email to businesses in regard to the inclusion of GST on Google AdWords. Here is a copy of the email.
Dear Google AdWords Advertiser,
This email has been sent to notify you of important changes that will affect your AdWords advertising account. [Account Name]
Some of the changes that will take effect include:
Transfer of Services. Starting from November 1st, 2016, your advertising contract has been assigned to Google New Zealand, including related agreements and any amendments such as service agreements. With effect from this date, Google New Zealand is bound by the contract terms to provide you with the services and is also responsible for invoicing you.
How GST is applicable. Google New Zealand is required by law to charge GST at 10% for its services. As of November 1st, 2016, the 10% GST will be included in your monthly statement as a newly added item. If you have questions about the tax consequences of this change, please consult your accountant or bookkeeper.
Amendments to the terms of advertising. Beginning November 1st, 2016, some sections of the terms of advertising will change. The updated terms are available on the conditions and terms page — please read them to understand what is required of your business in regard to GST on AdWords.
Neither the changes in the terms of advertising nor the transfer of services should cause any service interruption. Payment methods will still be charged automatically just like before.
Sincerely,
Google AdWords team