As a non-resident SME doing business in Australia or operating with an Australian investment portfolio, GST is a tax that many SMEs consider very important.
Managing your GST and BAS obligations is essential if your Australian SME operations are in Perth or across Australia. If you do not properly manage your GST obligations, the cost from top-line revenue could turn a profitable Australian business into a loss.
What is the Australian GST on non-resident business?
Australia’s GST is a 10% broad-based tax on most goods, services, and other items sold or consumed in Australia. Suppose an offshore entity is required to register for Australian GST or opts to register. In that case, it must lodge periodic GST returns and remit one-eleventh of the price of taxable supplies to the Australian Taxation Office (ATO).
An overseas entity may need to register for GST if it makes supplies through an enterprise operating from a fixed or other place in Australia or through an offshore enterprise.
When does a non-resident need to apply for GST registration?
A non-resident entity carrying on an enterprise must register for GST in Australia if its ‘GST turnover’ meets or exceeds AUD 75,000 within 12 months, based on current and projected income. GST turnover generally includes income from supplies ‘connected with’ Australia, excluding:
- Supplies that are ‘input taxed’ (e.g., financial supplies, residential lease).
- ‘GST-free’ supplies (e.g., basic foods, medical aids, health goods) not made through an enterprise the entity operates in Australia.
- Supplies made without consideration.
- Supplies not related to the entity’s enterprise.
Additionally, an entity may voluntarily register for GST if its annual turnover exceeds AUD 75,000.
When is a supply connected with Australia?
A supply is ‘connected with’ Australia if:
- For goods: The supplier delivers or makes the goods available to the recipient in Australia, removes them from Australia, or imports them into Australia.
- For low-value imported goods (LVGs): The LVGs are supplied offshore to a ‘consumer’ in Australia.
- For real property: The property, or the land it relates to, is in Australia.
- For other supplies:
- The service or action takes place in Australia.
- The supply is made through an enterprise the supplier operates in Australia.
- If neither of the above applies, the supply involves a right or option to acquire something connected with Australia (e.g., a travel package for Tasmania offered by a New Zealand travel operator).
- The recipient is an ‘Australian consumer’.
If your supply includes real property, additional GST exemptions like the margin scheme should also be considered when financially modelling your net liability.
What items should an offshore entity consider in the AUD 75k threshold?
Understanding what a non-resident entity must include in its annual turnover can be difficult. The following table indicates what you would ordinarily include in your annual turnover.
Type of supply made by an offshore entity
| Type of supply made by the offshore entity | GST treatment | Include the supply’s value in your GST registration turnover. |
| Offshore supply of LVGs to a consumer in Australia | Taxable supply | Yes |
| Offshore supply of LVGs to a consumer in Australia made via an electronic distribution platform/marketplace (EDP) | Taxable supply by the EDP | No |
| Offshore supply of LVGs to a GST-registered business customer in Australia, whether via EDP or not | Out of scope [The ‘taxable importation’ rules may require the importer to pay GST at the Australian border.] | No |
| Offshore supply of imported goods, or consignment of multiple goods, with a value over AUD 1,000 | Out of scope [The ‘taxable importation’ rules may require the importer to pay GST at the Australian border.] | No |
| Cross-border digital supply of services, rights or products to an ‘Australian consumer’ | Taxable supply | Yes |
| Cross-border digital supply of services, rights or products to an ‘Australian consumer’ made via an EDP | Taxable supply by the EDP | No |
| Other cross-border digital supplies of services, rights or products (e.g., supply to a GST-registered business customer in Australia acquiring the thing for a business purpose), whether via EDP or not | Out of scope | No |
| A Business to Consumer (B2C) supply of services or another intangible thing that involves the supply being: – Done in Australia and – Supplied through an enterprise the non-resident entity carries on in Australia. | Taxable supply | Yes |
| A Business to Business (B2B) supply of services or another intangible thing that involves the supply being done in Australia but is not supplied through an enterprise the offshore entity carries on in Australia | Out of scope (i.e., deemed not ‘connected with’ Australia) – provided the recipient is GST registered, has an enterprise being carried out in Australia, and the acquisition is for business purposes. Taxable supply if the rules of disconnection do not apply | No Yes |
| Supply of short-stay accommodation in residential premises located in Australia or leasing out of residential premises to residential tenants in Australia | Input taxed supply | No |
| Supply of non-residential land or premises located in Australia by way of lease | Taxable supply | Yes |
How to register for Australian GST when offshore
Offshore entities register for Australian GST under the standard registration process through www.abr.gov.au or their registered tax agent, like Westcourt, unless they qualify for the simplified GST registration. The simplified option is available for low-value goods (LVGs) to Australian consumers or for supplying digital products and services to Australian consumers.
The simplified GST registration is not available to non-resident businesses that import and store goods in Australia before selling them, whether directly or via an electronic distribution platform (EDP).
Standard registration involves specific requirements, including identity verification, and allows for claiming GST input tax credits. On the other hand, simplified registration is more straightforward but does not permit the claiming of input tax credits.
It is essential to ensure compliance with GST obligations, as failure to register when required or other non-compliance can result in penalties from the Australian Taxation Office (ATO).
GST and your permanent establishment
Simply because you are required to report and pay GST does not always mean you are carrying on a permanent establishment. So, when identifying your approach to your Australian operations, it is important to get stepped advice that covers your GST, income tax, and withholding tax obligations.
Understanding how GST affects your Australian operations
Understanding the GST requirements when operating in Australia is essential to managing and navigating your Australian GST requirements.
The requirement to register for GST is determined by factors such as turnover from relevant supplies, the nature of business activities undertaken, and supplies being ‘connected with’ Australia. Additionally, different rules apply to the supply of goods, services, and other things, so assessing whether supplies being made to Australian customers are subject to GST or qualify for exemptions is essential.
Seeking professional advice tailored to your specific circumstances is highly recommended to help you navigate the complexities of the GST rules and meet your GST reporting and payment obligations. Adherence to the Australian GST law and effective management of GST responsibilities will assist New Zealand entities in maintaining smooth operations in the Australian market.
For more information, don’t hesitate to contact your usual Westcourt advisor.
