GST stands for Goods and services tax in Australia. It is a broad tax of 10% on most goods, services and other items sold or consumed in Australia. It is what we understand as a consumption tax.
In Australia, as in the United States and Canada, our offshore companies are required to consider the GST tax obligation for sales into the Australian market, which is a consumption tax, similar to the VAT in the European Union and the Middle East, which is a tax on the sale of goods and services.
When do I need to register for Australian GST?
A non-resident (offshore) business must register with the Australian GST under the following 2 conditions:
When your company's GST turnover (total business revenue minus GST) is A$75,000 (GST threshold) or more (A$150,000 for not-for-profit organizations);
When you start a new business and expect your first year's turnover to reach the GST threshold (A$150,000 for not-for-profit organizations);
If your GST turnover is less than AUD$75,000, you can voluntarily register with the GST and if you choose to do so, you must normally maintain it for at least 12 months before it can be canceled.
IMPORTANT: If a business sells all of its sales (specifically direct mail) to Australian consumers through a third-party sales platform, it does not need to register for the GST as it will be withheld and paid by the sales platform.
Standard GST and Simple GST Registration
For non-resident (offshore) businesses there are 2 ways to register for Australian GST, Standard GST and Simplified GST:
Easy Registration
Simplified GST registration applies to non-resident businesses - including merchants, Electronic Distribution Platform (EDP) carriers and freight forwarders - who..:
-An Australian Business Number (ABN) is not required;
-Sales with Australia;
-Sells imported services and digital products to Australian consumers;
-Selling low-value imported goods (A$1,000 or less) to consumers;
-Want to register, report and pay electronically quickly and easily;
-Not required to claim GST credit (including credit for dutiable imports).
By registering, you elect to become a limited registered entity and are not entitled to receive an ABN or claim a GST credit for purchases.
Standards Registration
The standard GST registration applies to the following non-resident businesses:
-Have the right or ownership of an Australian Business Number (ABN);
-Sales with Australia;
-Want to issue a tax invoice;
-Want to apply for GST credit.
It cannot be lodged electronically from outside Australia and requires the engagement of an Australian registered tax agent.
Difference between Simplified Registration and Standard Registration
Businesses using Simplified GST Registration will be eligible:
-No ABN is required, the seller will have an ARN number which cannot be used for import customs clearance;
-Compliant sales in Australia;
-Selling imported services, digital products or low value imported goods;
-Want to register, report and pay electronically quickly and easily;
-Cannot issue a tax invoice;
-There is no need to prove the identity of the business, i.e. registration does not require a notarization of the business identity;
-No GST credit (including taxable import credit) is required.
Businesses that register with the standard GST will be eligible:
-Have or need an ABN;
-Compliant sales in Australia;
-Tax invoices are required;
-Want to apply for GST credit.
What will happen if you don't register?
If you are not registered with GST, check once a month to see if you have reached or are likely to exceed the thresholds. You need to register within 21 days of your GST turnover exceeding the relevant threshold.
If you are required to register for GST without actively registering for GST, you may be required to pay GST on sales from the date you are required to register, and you may also be required to pay penalties and interest.
Familiarizing yourself with Australia's GST laws and regulations is a necessary step for sellers to enter the Australian market. Compared with the fierce competition in Europe and the United States, the number of Chinese sellers in the Australian market is relatively small, and it is still a blue ocean market with great potential.
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