Amazon Australia (Amazon.com.au) is Australia’s most popular ecommerce site, and the 8th most popular website in the country. If you want to start selling your products in Australia it’s a great place to start. Amazon’s not the only way to reach Australian shoppers though and building your own store gives you much more control. Wherever you’re selling, in a country where online spending is up 14% year-on-year, getting started is the important part.
However, you need to understand how Australia’s Goods and Services Tax (GST) works before you get underway. There are specific rules for non-resident sellers and where sales take place makes a difference to what’s required of you.
Before I can explain how GST rules differ by the sales channel you’re using, you’ll need to know some basics.
Australia’s Goods and Services Tax is an indirect tax like Value Added Tax (VAT). GST in Australia has a single rate – 10% - which applies in every Australian State. Some goods and services – like basic food items – are exempt.
If you’re selling your products and services to customers in Australia, you might need to register for GST. Once registered, you’ll then have to collect and remit GST on eligible sales to the ATO (Australian Tax Office). You can register voluntarily, but you will have to register if:
The GST threshold is your total income from sales you’ve made in Australia, minus GST included in your sales. Not all sales count towards your GST turnover, which can make it a bit tricky to calculate.
Let’s say for example, that your business and your inventory are in Boise, Idaho, USA. When an Australian customer places an order with you, it’s considered a “distance sale”. There are two points in that transaction at which the GST could apply: on import or on the sale. It’s the same rate (10%) in both instances, but when GST applies to a distance sale depends on:
The “low value” threshold in Australia is A$1000 per item. If you import an item worth more than A$1000 to Australia, customs duties and import GST are payable at the border. GST only applies once per transaction, so if it’s applied at the border, that item won’t be subject to sales GST.
Items valued at less than A$1000 don’t face duties and GST upon import. Depending on the sales channel and your GST registration status, GST is instead applied at the point of sale.
The Australian Tax Office can consider an online marketplace a “electronic distribution platform” (EDP). This is similar (though not the same) to the “deemed supplier” rule in the EU. Generally speaking, the EDP is responsible for collecting and remitting the GST on sales on their platform when:
This is important because when the EDP is responsible for the GST, that sale might not count towards your GST threshold.
Just remember – EDPs aren’t responsible in every case. For example, if you’re selling stock that you’ve stored in an Australian warehouse on an EDP.
It’s important to note here that Electronic Distribution Platforms aren’t obligated to handle the GST on sales of stock already in Australia. For example, if you’re selling on Amazon Australia through Amazon FBA, Amazon won’t charge your customer GST. This is because selling stock already inside the country is considered a “domestic sale”.
You can see this outlined in the Law Companion Ruling (LCR 2018/2) that defined an EDP and their responsibilities:
An EDP operator will not be responsible for GST on some supplies that are connected with Australia under existing rules, including supplies of goods that are sourced from within Australia, and certain digital services or digital products supplied by Australian-based merchants.
As a consequence, sales of stock you hold in Australia will count towards the GST threshold. When you import your product in bulk into Australia, it’ll be subject to import GST and customs duties. Once you’re registered for GST, you’ll then have to charge your customers GST when you sell them that inventory.
Speaking in broad terms, if you own the sales channel, you own the responsibility for the GST. That means if you built your store on Shopify or WooCommerce, you need to be paying attention to your GST turnover. Once you pass the threshold you have to register for GST. Then, you’ll be required to charge your customers GST (when applicable) and pass it to the ATO.
Another major difference between selling on an EDP versus your own store, is that you're responsible for making sure you're correctly charging GST. Some goods and services are exempt, and it’s up to you to make sure you’re not charging GST on them. Marketplaces like Amazon Australia would be taking care of that for you.
Australia has two versions of the GST registration: Standard and Simplified. Each has its pros and cons which you’ll want to consider as you approach the GST threshold.
This is the registration that most businesses in Australia have. If you’re storing your inventory in Australia, you’ll have to apply for the standard registration. To apply for the standard GST registration, you’ll need to get an Australian Business Number (ABN).
The main benefit to having a standard registration is that you can reclaim GST on your returns. You’ll be able to offset GST you pay on imports or purchases against GST you collect on your sales.
Simplified registrations were pretty much designed for non-resident ecommerce businesses. You can apply for one without having to get an ABN first. The downside is that on a simplified registration, you can't reclaim any GST. If you're only importing low value goods you're unlikely to have any to reclaim anyway. However, it's still worth considering if you're thinking of further expanding your business operations in Australia.
