Does your offshore business, or foreign company, supply goods or services to Australian consumers?  If so, you should be aware of your obligations in Australia under the Goods and Services Tax (GST) regime.

Whether your business focus is on services, digital products, or low-value goods, understanding Australian GST is essential for international businesses operating in Australia.

What is GST?

Australian GST closely parallels Value Added Tax (VAT) or Sales Tax systems in other countries.  It represents 10% tax applied to the value of the supply of services or goods.

When does GST apply to you?

You are liable to pay GST on goods or services to Australia if your supplies/services reach a threshold of $75,000.

You must then register for GST.

Types of Goods or services:

Determining whether you need to charge GST to the Australian Taxation Office (ATO) depends on what you are selling and how you are selling it.

Some of the goods or services that you are liable to pay GST if you met the threshold are:

• Electronic Distribution Platforms: GST is payable on the management of a platform which facilitates the facilitating sale of services, digital products, or low-value goods to Australian customers.
• Low-Value Goods: If you directly sell low-value goods to Australian consumers.
• Services and Digital Products: If your business involves the provision of services or digital products to Australian consumers.
• Redeliverers: If you are engaged in delivering low-value goods to Australia on behalf of consumers.

What is Required:

For businesses falling into these categories, consider the following steps:

• Registration: You must register if the total value of your sales connected to Australia reaches $75,000 or more in a 12-month period. If required, register for GST within 21 days, and the quickest way is through simplified GST registration, allowing you to lodge and pay online.
• Pricing: Charge GST by including it in the price when selling your products or services to Australian consumers.
• Reporting: Report the GST collected to the ATO by lodging a return or a business activity statement (BAS).
• Payment: Pay the amount of GST to the ATO, ensuring it is converted to Australian dollars.

The Consequences of Not Registering:

If you fail to register for GST when required, you may have to pay GST on sales made from the date you were supposed to register, even if you didn’t include GST in the price.

Penalties and interest may also apply.

As an offshore business, it is essential to ensure your Australian GST compliance is well-established. Focusing on GST from the outset not only guarantees compliance but also positions your business favourably in the Australian market.

For inquiries related to GST, contact us at admin@waterhouselawyers.com.au or call 02 9252 8746.