What is GST?
GST refers to Goods & Services Tax – it operates in a similar manner to VAT in European countries.
The GST rate in Australia is 10% – this applies to most goods and services sold/consumed in Australia. Some exemptions apply for certain transactions (‘GST-free’) such as basic foodstuffs and some medications[1].
Do I need to register for GST?
There is a basic threshold based on annual turnover – this is currently set at AUD 75,000. It is mandatory for businesses who meet this threshold to apply for GST.
Registration must be completed within 21 days of reaching the annual turnover threshold. Failure to do so can lead to additional penalties, including paying GST for sales even if no GST was collected from customers.
Businesses who do not meet the annual turnover threshold do not need to apply for GST. However, it is still possible to apply on a voluntary basis. Registration allows businesses to:
- Issue zero-rated GST invoices to B2B customers
- Reclaim GST paid on B2B purchases
- Reclaim import GST
Additional GST Regulations
There are two additional basic regulations which apply to overseas sellers, particularly for those that are engaging in e-commerce:
GSTR 2017/1 – GST on imported services and digital products[2]
- From the 1st July 2017, the 10% GST rate also applies to electronic/digital services sold to Australian customers by overseas sellers
[1] https://www.ato.gov.au/Business/GST/When-to-charge-GST-(and-when-not-to)/GST-free-sales
[2] https://www.ato.gov.au/Business/International-tax-for-business/GST-on-imported-goods-and-services/GST-on-imported-services-and-digital-products/
LCR 2018/1 – GST on low-value imported goods[1]
- From the 1st July 2018, imported goods of low value (under AUD 1000) are taxable, and must have GST applied
- No customs duties are applicable for low-value imported goods
- Electronic Distribution Platforms (i.e. digital marketplaces) are required to calculate/collect/remit GST on behalf of sellers for transactions classified as low value
- Sellers using their own platform to sell low value goods must collect and remit GST themselves
For both regulations, the basic registration threshold still applies. This means that businesses that trade under the threshold do not need to collect/remit GST, until they are registered.
The only exemption to this is if your business is using an Electronic Distribution Platform (e.g. Amazon). These platforms must collect/remit GST on your behalf for all transactions under AUD 1000, even if your own business is not registered for GST.
How do I register for GST?
As part of the standard registration process, you will be issued with an ABN (Australian Business Number). The ABN is a unique 11-digit identifier that is used for all correspondence with the Australian Tax Office, for any transactions conducted with other GST-registered businesses, and for managing GST payments/reclaims[2].
The registration process usually takes around 2-3 months from the point the application is submitted to the Australian Tax Office.
The following documents are required:
- Company certificate (certified translation, if the original is not in English)
- Passport/National ID card
- Bank details
- Amazon Seller Account details
- Amazon summary reports – to indicate proof of trading (if using Amazon)
- Amazon fulfilment screenshots – to indicate proof of trading (if using Amazon)
All company and proof of identity documents must be notarised either by a Notary Public, or suitable staff at an Australian Embassy. This serves to prove that the documents are genuine.
- All documents must be signed, stamped and annotated by the Notary Public
- Each page must be initialled
- The responsible Notary Public must include their name, date of certification, telephone number and position
How does filing GST work?
Under the standard registration system, the filing frequency will depend on your annual turnover.
Frequency:
- Monthly: turnover ≥ AUD 20M
- Quarterly: turnover < AUD 20M
- Annually: turnover < AUD 7.5M
Deadline:
- Monthly: 21st of the following month
- Quarterly: 28th of the following month
- Annually: 31st January, each year
[1] https://www.ato.gov.au/Business/International-tax-for-business/GST-on-imported-goods-and-services/GST-on-low-value-imported-goods/
[2] https://www.ato.gov.au/Business/GST/Registering-for-GST/#:~:text=Once%20you%20are%20required%20to,operate%20more%20than%20one%20business