The Australian Goods and Services Tax (‘GST’) was introduced in July 2000. It is similar to the European Union’s VAT system, requiring re-calculation and payments to the tax authorities at each transaction point in the onward sales chain.
Should you register for Australian GST
For foreign companies providing goods or services ‘connected with Australia’, there may be a statutory obligation to register for GST.
This includes the ongoing compliance requirements to file periodic tax returns and pay over any GST due to the Australian tax office. Typical situations requiring an Australian GST registration include:
- Where goods are delivered within Australia;
- If the foreign trader imports, installs or assembles goods in Australia;
- Export of goods from Australia;
- Supply of property, including lease rental; and
- Supplies of services, e.g, consulting services, sport and entertainment events.
GST registration threshold
There is an annual GST registration threshold of AUD 75000, based on both the current and projected turnover. It is not compulsory to register if your annual sales turnover is below this amount.
Many companies below this level, however, elect for a voluntary GST registration. This enables them to claim back any Australian GST incurred during the supply of the goods or services. For example, GST on the import of goods, or local sub-contractor invoices.
Registering for GST
A foreign, non-resident trader is required to appoint an Australian resident tax agent. The agent is responsible for all communications between the company and the Australian tax authorities. In addition, in certain circumstances, the Australian tax authorities will also require a local bank account for payments of tax credits or similar refunds.