Know your consumer: ATO’s new draft ruling for GST cross-border supplies

On 10 June 2026, the ATO released draft ruling GSTR 2026/D1 (‘the ruling’) which is intended to replace GSTR 2017/1. The draft ruling provides updated guidance on determining when an overseas supplier is making cross-border supplies of services, digital products, or rights to an ‘Australian consumer’ and, therefore, making supplies connected with Australia for GST purposes.

Importantly, the Australian Taxation Office (ATO) has confirmed that there is no substantive change to its interpretation of the underlying goods and services tax (GST) law, commonly known as the ‘Netflix Tax’.

Instead, the draft ruling clarifies and expands upon the existing guidance by addressing both parts of the Australian consumer test, incorporating the safeguard approach, and expanded compliance guidance.

Residency and consumer elements – greater focus on consumer limb

The definition of an Australian consumer remains unchanged and continues to require both the residency element and the consumer element to be satisfied. That is that the recipient is an Australian resident for income tax purposes and is either not registered for GST, or if registered, does not acquire the supply for the purpose of an enterprise.

However, GSTR 2026/D1 significantly expands on the consumer element, which was only lightly addressed in GSTR 2017/1. The earlier ruling focused more heavily on residency indicators, such as billing address and IP data, with comparatively limited practical guidance on GST registration and the purpose of acquisition.

The draft confirms that where a recipient provides an Australian business number (ABN) and represents to the supplier that they are registered for GST, a supplier may rely on that representation not only to establish GST registration, but also to conclude that the acquisition is made for enterprise purposes.

The safeguard approach under section 84-100

A central feature of the draft is the clearer articulation of the ‘safeguard approach’ under section 84-100. While not new, it is now framed as a more structured methodology for forming a reasonable belief about whether a recipient is not an Australian consumer.

This approach provides a pathway for suppliers to treat a supply as ‘not made to an Australian consumer’, provided they:

• collect specified information (e.g. ABN, declarations that the recipient is registered for GST)
• maintain consistent records
• apply defined system controls.

The key being that the supplier has undertaken all reasonable steps to form its conclusion.

Where the safeguard approach is followed, a greater level of certainty and protection is provided to the supplier, particularly for automated or high-volume environments where individual review is impractical.

Attribution and compliance approaches

The draft expands guidance on timing and attribution, making it clear that a recipient’s status is generally determined at the time of invoice or receipt of consideration. This is particularly important for subscription and other ongoing arrangements, where a customer’s circumstances may change over time or additional information becomes available after the initial transaction.

The draft also introduces more detailed compliance approaches, particularly in relation to the consumer element safeguard. For initial supplies to a recipient, greater leeway is provided where an ABN check indicates that the recipient is not registered, but the recipient has provided evidence of registration to the supplier.

For ongoing supplies, more structured processes are expected, including:

• ongoing monitoring (e.g. regular ABN Lookup checks at least every 6 months)
• annual GST registration verification.

The draft reiterates that suppliers may rely on comparable jurisdiction approaches (EU, UK, NZ, and Norway) for determining residency.

Where suppliers operate outside the safeguard, reliance is generally limited to information already held within their systems to determine only if the recipient acquires the supply for the purpose of its enterprise.

How SW can help

GSTR 2026/D1 does not change the legal framework, but it clearly raises expectations around how businesses implement and provide evidence of compliance. In particular, the increased focus on GST registration, the consumer element, and ongoing verification means more structured processes will be required than under GSTR 2017/1.

Businesses should review their onboarding procedures, ABN validation processes, and system controls to ensure they align with the draft and can support a defensible position if reviewed by the ATO. Early alignment with the ATO’s compliance approaches will help reduce risk and improve consistency across cross-border transactions.

The ATO has invited public comments on the draft ruling, with submissions due by 24 July 2026.

If you would like to understand how these changes may impact your cross-border GST obligations, please contact your SW advisor or speak with our GST specialists.

Contributors

Dylan Kelly | Senior Consultant, Tax