G’day mate! If you run a Shopify store in Australia, you must know when to charge GST to your customers. This short article will guide you through Australian taxes.
Goods and Services Tax, also known as GST is a 10% tax charged in Australia on the majority of products. This article will help you configure your taxes correctly according to Australia’s taxation changes valid from July 1, 2017.
My business is not GST registered
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.
My business is GST registered
If your annual turnover surpassed the threshold of $75,000, you are required to register for GST using your Australian Business Number (ABN). You also need to charge GST to your customers.
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 are compliant with Australian legislation. They include your ABN number and detailed breakdowns of GST charged, and serve as a valid documentation for both you and your customers’ bookkeeping.
Selling outside of Australia
If you are a non-registered business that sells outside of Australia, you do not charge taxes on your products.
For GST-registered businesses selling outside of Australia, a different concept applies. If you export goods from Australia within 60 days of receiving any payments or issuing invoices, the transaction is GST-free.
However, if the product remains in Australia for 60 days or more after receiving an international payment or issuing an invoice, you have to charge 10% GST.
Taxable, GST-free sales and input-taxed sales
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 is mainly applicable to medical, health, and educational products. These sales do not include GST in the price but you can still claim GST credits.
Finally, an input-taxed sale refers to services such as lending money or renting out properties; none of which are taxable. No GST is charged and you cannot claim any GST credits.
Selling digital goods
Digital goods are intangible products that exist only in digital form such as e-books, music, or online courses.
As of July 1, 2017, Australia has implemented the GST on all digital goods, also known as the “Netflix tax”. Therefore, a business with an annual turnover over $75,000 will be required to charge GST on all digital products.