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) and is 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 have registered for GST your cash flow is not affected as you can claim the GST amount back when you lodge your business activity statements (BAS). But if your business has not registered for GST, it means that you will have to pay 10% more for your Google adverts and you cannot be able to claim GST back.
An important thing that all business owners should note is that whatever your current Google AdWords budget is at present, it will stay the same because 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, and here is the 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 like service agreements. It means that with effect from this date, November 1st, 2016, Google New Zealand is bound by the contract terms to provide you with the services and also is responsible for invoicing you.
How GST is applicable
Google New Zealand by law is required to charge GST at 10% for its services and as of November 1st, 2016, the 10% GST will be inclusive in your monthly statement. It will come as a newly added item on your statement.
If you have questions regarding the tax consequences because of this new change it is advisable to consult with your accountant or bookkeeper.
Amendments of terms of advertising
Beginning November 1st, 2016, there are some sections in terms of advertising that will change. The new updated copy of the terms of advertising is available here. From November 1st, 2016, you can find the new advertising terms in the conditions and terms page and you should read them to fully 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 you service interruption. Payment methods will still be charged automatically just like before.
If you may have any questions in regard to the above changes click here to get in touch with us.
Google AdWords team