If a sex industry establishment is required to register for GST, it includes GST in the amounts charged to clients and sends the GST to us.
Whether GST is charged by individual sex workers will depend on the way payment is arranged and if the worker:
- has an Australian business number (ABN)
- is registered for GST.
Workers who are not registered for GST will not be able to claim GST credits for any GST amounts paid on business-related expenses.
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Escort workers
Where an establishment sends an escort worker to a function or other venue, the price quoted for the total service will include GST.
The total payment is included in the establishment's turnover and any subsequent splitting of the payment between the worker and the establishment is a separate arrangement between the two parties.
Services provided at establishments
Where a client receives a service at an establishment, GST obligations differ according to the way payment occurs. Payment by the client may occur as:
- an upfront fee paid to the establishment for the room hire and service (with the establishment making a subsequent payment to the worker), or
- the cost of the room hire paid to the establishment and the charge for the service paid directly to the worker.
GST obligations depend on whether or not the worker:
- has an Australian business number (ABN)
- is registered for GST.
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Upfront fee paid to the establishment
Where an establishment charges a client an upfront fee for the room hire and service, the amount the client pays will include GST and the establishment will include the total GST amount in their accounting.
The GST implications of any subsequent payment the establishment makes to the worker will depend on whether the worker has an ABN and is registered for GST.
These GST implications also apply where a worker uses the establishment’s merchant credit card or EFTPOS facilities to process a client’s payment and the establishment subsequently pays the worker their share of the proceeds.
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The worker does not have an ABN
If the establishment makes a payment to a worker without an ABN for their services, PAYG withholding may apply.
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The worker has an ABN
When the establishment makes a payment to a worker for their services, PAYG withholding will not apply if the worker provides their ABN.
If the worker with an ABN is registered for GST, the worker will charge GST on the value of their services to the establishment. The establishment will be able to claim GST credits for any GST amounts paid to the worker. For the establishment to claim GST credits for these amounts, it will need to obtain a tax invoice from the worker.
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Separate payments to the establishment and worker
Where the client makes separate payments to the establishment and the worker, the amount the client pays to the establishment for room hire will include GST and the establishment will include the total GST amount in their accounting.
The client pays the worker directly the amount charged for the service.
The worker’s eligibility to charge GST for their services depends on whether they have an ABN and are registered for GST.
The worker does not have an ABN
Workers without an ABN cannot be registered for GST so there is no GST amount in the charge for the service.
The worker has an ABN but is not registered for GST
Workers who have an ABN but are not registered for GST cannot include GST in the charge for the service.
The worker has an ABN and is registered for GST
Workers who are registered for GST will charge GST on their services to clients and will account for this GST amount in their next tax period. The worker will be required to issue a tax invoice to the client within 28 days if requested.
The worker will be able to claim GST credits for any GST amounts paid on business-related expenses.
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Expenses paid by workers
Any expenses paid by a worker to an establishment, such as a shift fee, will include GST. If the worker is registered for GST, they will be able to claim GST credits for these amounts. To claim these GST credits, the worker will need to obtain a tax invoice from the establishment.
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Information about how GST applies to services provided by workers and establishments in the sex industry.