This morning Google announced that they were changing some of their advertising terms and conditions.
The most important part of the announcement is that goods and services tax (GST) will be charged on Google AdWords spends from 1 November 2016.
As a technicality, Google are assigning Australian based advertising contracts to Google Australia Pty Ltd, which is why there is a change in the GST treatment.
For some time there has been confusion when accounting for GST on purchases from overseas entities. Our advice to clients has consistently been, if you intend on claiming back GST on expenditure and the amount was more than $75 (plus GST), you need to be able to produce an invoice to substantiate your claim.
If you use Google AdWords, that advice still applies. Check the invoices you receive. If they include GST (and the supply is in connection with your business), you are entitled to claim the GST when lodging your Activity Statements.
Please note that the above is general advice only, and Google have only released this update this morning. We will be contacting clients that use Google to advertise prior to lodging their next impacted Activity Statement to ensure that they are accounting for these updates correctly.
If you have a specific tax or GST advice need, please do not hesitate to contact us.
Google have added additional information in their help documentation here: https://support.google.com/adwords/answer/2375370?hl=en-AU