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GST in Australia – A Guide for Overseas Employers

Doing business in a foreign country will require the collection and payment of different business or corporate taxes. In Australia, this is called the Goods and Services Tax (GST), which is similar to VAT or a sales tax, but handled differently. 

Although the end customer pays GST within the sales price, the business is responsible for issuing tax invoices and collecting the tax.  If you have a company or subsidiary in Australia, you will be need to understand the rules for accounting of GST on sales.

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What is GST in Australia?

Goods and Services Tax (GST) is a tax imposed on most goods and services sold or consumed in Australia.  GST is already included in prices, which differs from countries like the US or Canada that add the tax at the point of sale.

Who is Charged GST in Australia?

Any business with a certain threshold of sales must register for GST within 21 days of crossing that threshold.  Then, all goods and services sold in Australia will be taxable, unless designated as GST-free.

In reality, the customer pays the GST amount as part of the transaction, and then the business will issue a tax invoice to the customer within 28 days, so they have the opportunity to claim a GST credit.

Client Case Example

Context:

We had a client that was dealing with a complex transaction that involved purchasing services of another party through an Australian firm.  They wanted to know where the GST was being charged and invoiced, and if it was possible to have the invoice issued to their Australian subsidiary.

Solution:

In our response, we explained how GST will be charged on services delivered or made available in Australia, and then an invoice is issued to the purchaser.  We advised them that the invoice could be issued to their Australian subsidiary.

Need more information about Australia?

Payment of taxes is one issue that every company faces when doing business abroad, and that can include GST as in this case.  Through our local employer of record in Australia, we can assist you with all tax compliance issues and reporting.

If you are just entering the Australian market, you may need more information such as:

How to calculate and invoice the GST payment for customers?

When are the payment deadlines for GST?

What is the best accounting approach for GST internally?

Because of our experience in taxation, immigration, payroll and compliance, we make international employment simple in all major global markets.

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