G’day mate! If you run a Shopify store in Australia, you need to know when to charge goods and services tax (GST) to your customers. This brief article will guide you through Australian taxes.
GST is a 10% tax charged in Australia for most products. This article will help you configure your taxes correctly according to Australia’s taxation changes valid from March 2023.
Until your business exceeds an annual minimum turnover of AUD $75,000, you are not required to register for GST. In this case, you do not charge GST to your customers.
If your annual turnover surpassed the threshold of $75,000 during your first year, you are required to register for GST using your Australian Business Number (ABN). You also need to charge your customers GST.
GST registered businesses are also required to complete a Business Activity Statement (BAS) on a quarterly basis and report it to the Australian Taxation Office (ATO).
Invoices created in Sufio comply with Australian legislation. They include your ABN number and detailed breakdowns of GST charged. They also serve as a valid documentation for both you and your customers’ bookkeeping.
As set out above, if your business is non-registered, you do not charge GST. This applies regardless of where your consumers are located—whether inside or outside of Australia.
For GST-registered businesses selling outside of Australia, a different concept applies. Exported goods are GST-free if they are exported from Australia within 60 days of one of the following, whichever occurs first:
- the supplier receives any payment for the goods
- the supplier issues an invoice for the goods.
However, if the product remains in Australia for 60 days or more after receiving an international payment or issuing an invoice, you must charge 10% GST.
In Australia, GST is a unified tax applicable to all states; there are no further state taxes. The majority of the goods sold are 10% GST taxable, however, there are some exceptions that are GST-free.
A GST-free sale usually applies to medical, health, and educational products. These sales do not include GST in the price, but you can still claim GST credits.
You can claim GST credits for any GST included in the price you pay for things used in your business. This is called input-tax credit or GST credit. For more information on GST credits, see: when you can claim a GST credit.
An input-taxed sales are sales of goods or services that do not include GST. For example, services such as lending money or renting out properties. No GST is charged and you cannot claim any GST credits.
Digital goods are intangible products that exist only in digital form, such as e-books, music, or online courses.
GST is payable at 10% on the sale of all digital goods, including those sold to consumers outside of Australia. As set out above, this only applies to businesses with an annual turnover of over $75,000.