If you're an Australian author, you've probably been frustrated and confused by Apple's demands for an ABN (Australian Business Number) and proof of GST registration. After spending three days of emailing Apple support, wading through countless forums online and delving into Australian Tax law, here is what I found out. Please note that this is my understanding of the situation and its tax implications after consulting the ATO. I hope it helps.
I am an Australian author and resident. Apple have stipulated that in order to sell my books in the Australian iBooks store I must provide my ABN and proof of GST registration.
I already have an ABN for my massage therapy business and I am a sole trader. I am not registered for GST because my annual turnover does not meet or exceed the $75,000 threshold, and therefore, I am not bound by Australian tax law to be GST registered. However, I may voluntarily apply for GST if I wish.
How will GST registration effect my massage business?
The lovely people at the ATO have informed me that they understand sole traders can and do operate multiple businesses under the one ABN. If you are a sole trader you are only allowed to have one ABN but may operate as many businesses as you like. So if you were thinking of obtaining a seperate ABN for your authoring endeavours, you can't, unless you register a partnership, company or trust as a seperate entity to you as a sole trader. I was also told that if I do register for GST to appease Apple, I would only have to report the GST from my book sales. It would not mean that my massage therapy business was suddenly subject to GST reporting, because I do not charge GST to my massage clients.
Why does Apple want Australian's to provide ABN and GST registration?
Apple charges GST on book sales in its Australian store to comply with Australia's laws. That's all fine and good but... Apple also collects that GST and remits it to the ATO without any involvement from you, the author. They are the ones charging and collecting the GST, so it's their responsibility to report and remit it. The ATO told me that there was no need for them to demand GST registration from authors selling less than $75,000 worth of books a year. I would like to know of an author who does sell that amount in the Australian iBooks store and then ask them what black magic they used to achieve such a feat! The ATO says there is no legal requirement on their end and that Apple are probably guilty of quote, 'lazy accounting practices'.
So what should I do?
Basically, you have two choices.
If you register, Apple will be happy and you'll have the headache of extra admin and GST reporting and your books will appear on the Australian store.
If you don't register, Apple may or may not offer your book on the Australian store BUT if they do, the proceeds from all sales will be withheld until you register for GST.
Please note that GST registration ONLY effects the Australian iBooks store. You can happily sell on all stores in other countries. All you have to do is deselect Australia when setting up your sales territories and pricing. Although it's sad to think that my book won't be sold in my beloved country, I have to weigh up expected revenue verses the added responsibilities and paperwork of registering for GST. I anticipate that Australian iBook store sales will be negligible.
If you do decide to voluntarily register for GST to bow down to Apple, you will need to consider the ramifications for your book pricing. The lovely lady at the ATO informed me that if I were registered for GST, I would need to be charging GST ie: including GST in my book prices that I supply to Apple. I would then be reporting these GST amounts to the ATO on my BAS. This is when my head really started to pound! She then went into a convoluted explanation of the GST supply chain and each link's reporting responsibilities. I have to say, she lost me amid all of that. My out-take was that adding GST to my book prices would not be a good move in such a highly competitive market. Pricing is critical and although the GST on a $6.69 book is only 60c, that drives my book price up to $7.29 and into a sales bracket that will disadvantage me considerably. Your other option is to not add extra to your price and wear the GST out of your own pocket.
I hope this has been of some assistance. Gabriel x