International businesses that have sales connected to Australia over a certain threshold may need to register and pay GST in Australia. This applies to electronic distribution platform (EDP) operators that allow merchants to make sales of services, digital products or low value goods to Australian customers; merchants who sell services, digital products, and/or low value goods to consumers in Australia; and redeliverers that bring low value goods to Australia on behalf of a consumer.
Under GST, low value goods are generally goods with a customs value (ie price the goods are sold for, minus freight and insurance from place of export) of $1,000 or less. It should be noted GST will not apply to some sales such as basic/essential food and beverage items, certain medical services/medical aids and appliances, certain education courses and materials, as well as certain cars and car parts for eligible people. If you’re a relevant merchant, EDP, or redeliverer, and the value of sales connected to Australia over a 12-month period is equal to or more than AUD$75,000, you will be required to register for GST. The business will also be required to charge GST by including it in the price when selling the product or services to consumers in Australia.
The GST collected from the sales will need to be reported to the ATO through the lodgment of a GST return of a business activity statement (BAS), and the amount of GST collected will need to be remitted to the ATO in Australian dollars. For most merchants, EDPs and redeliverers, simplified GST registration will be the easiest way to meet their GST obligations in Australia. This can be used where an ABN is not needed by the non-resident businesses, and it also does not need to claim GST credits (including credits for taxable importations).
Additional requirements include making sales of low value goods or imported services and digital products. Once registered, non-resident businesses will receive secure access to ATO online services for non-residents which will allow registration, lodgment and payment of GST obligations. Once registration is completed, a unique 12-digit identifier, an Australian Reference Number (ARN), will be sent to the relevant non-resident business to use as an identifier for the ATO system and on invoices and customs documentation if required. Under simplified registration, non-resident businesses must lodge GST returns and pay GST on a quarterly basis. According to the ATO, when paying a GST liability, non-resident businesses must pay the full GST amount owing and any card payment fees, bank handling and exchange fees using either SWIFT or a credit/debit card. Non-resident businesses that don’t qualify for the simplified registration may have to apply for standard registration where registration thresholds are reached. It also applies where a non-resident business wants to issue tax invoices or want to claim GST credits which can’t be done under the simplified GST registration. However, the drawback with standard registration is that non-resident businesses will not be able to lodge electronically from outside of Australia and may need to engage an Australian registered tax agent. Additional ABN and proof of identity requirements also apply.
As the world becomes more interconnected the issue of non-resident businesses and GST will inevitably become more significant. Non-resident businesses should be aware of the rules to ensure that they register for GST when appropriate. The ATO notes that those that register for GST should stay registered for at least 12 months.
Speak to one of our accountants if you have any questions about the changes in tax for 2023.
