Australian GST

The Australian tax system includes a goods and services tax (GST) — a broad-based tax of 10% on most goods and services. Introduced in Australia in July 2000, GST is similar to the EU’s VAT system — it requires recalculation and payments to the Australian taxation office (part of the federal government) at each transaction point in the onward sales chain.

Generally, businesses registered for GST will include GST in the price they charge for their goods and services, and claim credits for the GST included in the price of goods and services they buy for their business.

A number of goods and services in Australia are GST free. These include basic food items, some education courses and materials, some medical and healthcare services, certain medicines, some childcare services, some religious services and charitable activities, supplies of accommodation and meals to some retirement home residents, cars for disabled people, water, sewerage and drainage, international transport and mail, precious metals, farmland, exports, and some telecommunications supplies.

Businesses that exceed the turnover threshold of AUD 75,000, or expect to do so within the next 12 months, must register for Australian GST. The threshold for non-profit organisations is AUD 150,000 per year.

Businesses providing taxi or limousine travel for passengers must register for GST regardless of their turnover. Businesses must also register for GST if they want to claim fuel tax credits. Registering for GST is optional for businesses that do not meet the above thresholds or criteria.

Foreign businesses must register for GST in Australia if their annual turnover from sales connected with Australia is equal to or exceeds the turnover threshold of AUD 75,000 (or AUD 150,000 if you are a non-profit organisation).

For overseas businesses, the GST turnover includes the combined value of imported services and digital products sold to Australian consumers and low-value imported goods sold to Australian consumers.

Overseas businesses may not need to register for GST in Australia if all of their sales are made through an online marketplace, or if they operate an electronic distribution platform (EDP). Businesses are considered an EDP if merchants can use their service to make sales to customers, or if their service is delivered by electronic communication (such as a website, online marketplace, or app store).

Carriage services, such as internet service providers and telecommunication companies, are not considered to be EDPs. Neither are those providing access to payment systems or processing payments.

To help remain compliant with GST laws, businesses should include the following information on their invoices to Australian customers:

• Business name and address

• Business tax number

• Invoice date

• Invoice sequencing number

• Description of the goods or services

• Rate of tax applied to each item

• Total amount including tax

Businesses can claim GST credits if GST is included in the price of goods and services they purchase as part of their business operations. This is referred to as an input tax credit or a GST credit, as it’s a credit for the tax included in the price a business inputs. Businesses must be registered for GST to claim input tax credits. Businesses can claim credits if:

• The business uses the purchase solely for their operations

• The purchase price included GST

• The business is liable to provide payment for the purchased item

• The business can produce a tax invoice from the supplier

Businesses should check that their suppliers are GST registered before claiming GST credits.