Understanding GST Basics
Australia has a 10% goods and services tax (GST) which applies broadly to most transactions, from physical goods to SaaS and digital products. International sellers wishing to sell into Australia must understand how this tax applies to non-resident sellers.
Fortunately, the Australian Taxation Office (ATO) is one of the most technologically advanced in the world, meaning the country makes it easy to get registered and stay tax compliant. But that also means it's one of the most sophisticated countries in the world at finding tax evaders!
This guide will help you understand when to register for Australian GST and how to make your business’s tax life easier by staying compliant.
When Are You Required to Start Charging GST in Australia?
Who needs to register in Australia, and when, depends on what products you sell, who you sell to, and how much you sell into Australia.
The A$75,000 B2C Threshold
Australia, very kindly, has a small business exemption when it comes to selling B2C goods, either digital or physical. In other words, if you sell to consumers there, you’re only required to register and begin collecting Australian GST once your business reaches, or is predicted to reach, a turnover of $75,000 AUD in the current year.
Why B2B Sales May Be Treated Differently
Australian GST works similarly to VAT when it comes to B2B sales. If selling to a business in Australia, your business is allowed to apply the reverse charge mechanism. This makes the purchasers of supplies (your customer), rather than the supplier (you), responsible for the tax.
As the seller, you collect your buyer’s Australian Business Number (ABN) and then indicate on the invoice that the reverse charge mechanism has been enacted.
To be eligible to apply the reverse charge mechanism to your buyers in Australia, you must not be registered for GST. The buyer only has to pay the GST on a purchase if that purchase is subject to GST. I.e., if they are buying something that is not taxed under Australian tax rules, then they’re not required to pay tax even if you apply the reverse charge mechanism.
What Happens If You Sell Through a Marketplace
Many large marketplaces like Amazon or eBay handle GST on your behalf. In other words, if you sell B2C directly to customers, you may be liable to register and collect Australian GST once you reach the $75,000 AUD turnover threshold. But if you sell via a 3rd party marketplace, those sales don’t count toward your threshold, and the marketplace takes care of collecting and remitting the tax for you.
When selling on a new marketplace, always double-check that they take responsibility for handling tax collection and remittance.
Choosing the Right Way to Register for GST
There are two ways to register for GST: the easy way and the much more involved way.
Simplified GST Registration for Digital Sellers
If your business makes or is predicted to make more than $75,000 AUD in the current year, then you’re required to register with the ATO no matter if you sell physical or digital goods.
Fortunately, if you have no physical presence in Australia, registration is so simple the country even calls it Simplified GST Registration.
even calls it Simplified GST Registration.
There are drawbacks to the simplified registration. Your business won’t be able to claim input credits or issue tax invoices. You also may not be eligible for simplified registration if you sell products priced at more than $1,000 each for import by Australian customers.
Full GST Registration With an ABN
If you have a physical presence in Australia, or plan to claim input credits or send tax invoices to your customers so they can claim credits, then you’ll need to register for Standard GST.
This is a more complex process, and includes first applying for an Australian Business Number (ABN). Learn more about applying for Standard GST in Australia here.
[[ctaLight]]
Charging the Correct GST on SaaS Sales
SaaS sellers must abide by Australia’s GST rules when selling into the country.
When and How to Collect GST
Once your business is required to register and collect GST, the actual collection process is fairly simple. Most sales are simply taxed at the nation’s 10% GST rate.
As a B2B seller, if you’re not based in Australia and not required to collect there, you can apply the reverse charge mechanism and put the onus of paying tax on your buyer.
There are some zero-rated and tax exempt products and services in Australia, such as basic food, education and medical products and services.
What Your Invoices Need to Include
If you are a seller with a standard GST registration you may be asked to issue a tax invoice to your customer.
This document should include:
- A note that the document is a tax invoice
- Seller’s identifying information
- Seller’s ABN
- Invoice date
- Brief description of item(s) sold, with quantity and price(s)
- Amount of GST charged
- Extent to which each sale on the invoice is taxable
Note that nonresident sellers who are registered with the Simplified GST Registration cannot issue tax invoices.
What to Expect When Filing GST Returns
Filing Frequency and Deadlines
Australian GST is generally due quarterly on the 28th day of the month following the due date and filed via the ATO’s online portal.
What You’ll Report to the ATO
Filing in Australia is fairly simple. You’ll report your gross Australian sales plus all GST collected for that taxable period.
Paying Your GST to the Australian Tax Authorities
If you are located outside of Australia, the ATO accepts payments via wire or international credit card.
Fines and Penalties for Late Filing
Filing and/or paying GST late may result in a failure to lodge penalty from the tax office. These penalties are based on the size of your business and how late the filing/payment is.
.png)
How Sphere Makes GST Compliance Effortless
While Australian GST is quite a bit simpler than tax schemes in most countries, the fact remains that it’s an administrative hassle that takes your time and focus away from running your business.
That’s where Sphere comes in. Sphere’s AI-forward indirect tax compliance solution:
- Alerts you when you need to register – You only need to register and collect Australian GST when you hit $75,000 AUD in sales in the current year. Sphere tracks your business activities and alerts you when you’re approaching that threshold and need to register.
- Registers you with the Australian Taxation Office (ATO) – Sphere handles registration, whether you only need to register for the Simplified GST or need the more complex ABN registration for businesses with a presence in the country.
- Calculates tax in real time – Sphere includes you’re collecting the right amount of tax, including no tax on GST-free items or applying the reverse charge mechanism with your Australian B2B customers.
- Centralizes filings and payments – Your Sphere dashboard shows you all of your global sales tax filings in one place. Always have your eyes on your tax situation, from Australia to South Africa.(And even the northern hemisphere, too!)
.png)
