Although we are used to warnings about privacy and cyber risks (see here), regulators have struggled to come to terms with “digital disruption” and how regulation applies to innovation fuelled by new technology.

In principle, laws should apply equally regardless of what technology is used but when it comes to deciding what regulations apply to new businesses regulators are “catching up”.

While we wait for the Government’s response to the technological issues considered by the Financial System Inquiry, it is no coincidence that tax is the driver for two recent developments:

• GST and digital services: Treasury has released an exposure draft Bill to ensure that digital products and other imported services (other than goods or real property) supplied to Australian consumers by foreign entities are subject to goods and services tax (GST) in a similar way to equivalent supplies made by Australian entities. This change will result in supplies of digital products, such as streaming or downloading of movies, music, apps, games, e-books as well as other services such as consultancy and professional services receiving similar GST treatment whether they are supplied by a local or foreign supplier.
• The sharing economy and tax: The ATO has published a guide “The sharing economy and tax” in which it describes the sharing economy (also referred to as collaborative consumption, peer-to-peer or similar terms) as a new way of connecting buyers (‘users’) and sellers (‘providers’) for economic activity. The ATO says that the tax laws which apply to activity conducted in a conventional manner apply in the same way to activity conducted in the sharing economy. There are income tax and GST implications for activities such as renting out or letting a room or other property for accommodation, renting out or letting car parking space, providing odd jobs, errands, deliveries or more skilled services on an ad hoc basis and using a car to transport members of the public for a fare.

ASIC’s report on AFSL and credit licence applications also highlights the increasing number of new business models based on new technology.