If you’re selling digital services and products to customers down under, then you might be liable for Australia’s Goods and Services tax (GST). This guide covers two very important parts of the system:
- Registering for the tax, and then
- Filing tax returns on time.
We’ve scoured the Australian Taxation Office (ATO) website to provide you with all the necessary information about GST for international businesses in one place.
How to register for GST in Australia
Australia offers two methods of tax registration for foreign businesses: the simplified and the standard. Each method has its pros and cons, so choose the one that suits your business.
In our opinion, this is the way to go. The simplified version of Australian tax registration, or Simplified GST, is designed specifically for foreign businesses who want to sell in Australia.
“The system allows you to register, lodge and pay your Australian GST online, manage your account details, and authorise others to securely access your account” — which sounds like everything you need. But actually the Simplified GST doesn’t allow you to claim input tax credits.
Here are the terms of using Simplified GST, listed from ATO’s website:
- You don’t have to prove your identity
- You use an ATO Reference Number (ARN) instead of an ABN (Australian Business Number)
- You can’t claim GST credits
- You can’t issue tax invoices or adjustment notes
- You must file your GST returns and pay GST quarterly
- You can pay electronically via SWIFT bank transfer or credit card
To register with Simplified GST, first you set up your AUSid. Once that account is ready, you can securely log into ATO’s online services for non-residents. When you’re logged in, you can register for GST! Simply follow instructions in the portal.
Once you’ve registered, ATO will send you an ATO reference number (ARN). This is a unique 12-digit identifier they’ll use to identify you in the system.
You’ll also receive a payment reference number (PRN), which you need to include on all your GST payments when you file returns. More on that later!
Standard GST system
The Standard GST system is the same tax registration that Australian businesses use themselves. For foreign businesses, this process takes longer than the Simplified route because there are extra bureaucratic steps.
The terms here are as follows:
- You must supply various documents that prove your identity
- You get an Australian business number (ABN) — and this allows you to issue legal tax invoices
- You can claim input tax credits
- You aren’t limited to quarterly accounting periods
- You use activity statements to report GST
To register for standard GST registration, you must have an ABN, which is a unique 11-digit identifier used to identify you. You can apply for an ABN and GST registration at the same time.
If you already have an ABN, then you can register for standard GST online via the Business Portal, by phone (13 28 66) or through a registered tax agent (if you’re using one).
Note: You can always change your registration in Australia, from Simplified GST to standard or vice versa. Justcontact the ATO and they will guide you through the switch.
How to file GST returns in Australia
First thing’s first: Australians don’t say “file” your tax returns, they say “lodge” your tax returns.
Second thing’s second: You must report in Australian dollars. The ATO provides a lot of instruction about how to properly convert foreign currencies to Australian dollars.
When to file and pay
Simplified GST requires it every quarter. The filing (“lodgment”) and payment due date are the same: the 28th of the month following the end of the quarter. You can lodge and pay using online services for non-residents.
- 28 April, for first quarter ending 31 March
- 28 July, for second quarter ending 30 June
- 28 October, for third quarter ending 30 September
- 28 February, for fourth quarter ending 31 December -- extra time on this one!
With Standard GST, the due date for submitting and paying is displayed on your business activity statement (BAS). If the due date is on a weekend or public holiday, you can lodge your form and pay on the next business day.
How to file
No matter how you registered for Australian GST, you can “lodge” your GST return online.
Log in to the ATO portal, selecting “Non-resident” from the dropdown.
Within your account, there should be clear directions for lodging and paying Australian GST.
How to pay
As you probably guessed, you must pay in Australian dollars, too! Once the conversion is taken care of, you actually have a lot of choice when it comes to making payments.
If you’re registered with the Simplified GST system, you can use your online business portal. Click the 'Log in and pay' GST button and pay by credit/debit card or overseas bank transfer.
Important: Make sure you provide the correct unique payment reference number (PRN) in the reference field every time you make a payment. This guarantees your money goes to the right account!
If you’re registered via the Standard GST system, check your other options on this ‘how to pay’ page. Some may require an Australian bank account.
What to do in between registering and filing?
Well, you must comply with all the rules for Australian GST! That means including 10% GST in the price of your products and charging it on all sales in the country, among other things.
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the Tax Agency.