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  • Sales of imported services and digital products to Australian GST-registered businesses

    GST applies to sales of imported services or digital products to Australian consumers. Your customer is not an Australian consumer if they are a GST-registered business who makes the purchases for business use.

    Your Australian GST-registered business customers will expect that you do not charge GST on sales of imported services and digital products to them. If you incorrectly charge GST, this can disadvantage your customers and they may seek a refund of the GST amount from you.

    Identifying GST-registered business customers

    Your business systems will need to be able to determine whether the sales are made to Australian consumers or to businesses that are registered for Australian GST.

    If your customer is an Australian resident, they are an Australian consumer if they are either:

    • not registered for GST (businesses are only required to register for GST in Australia if they meet or exceed the registration threshold of $75,000)
    • registered for GST but do not make the purchase for business use.

    You can be sure your customer is an Australian GST-registered business purchasing for business use if:

    • you obtain their Australian Business Number (ABN) and
    • they state to you that they are registered for GST.

    You can confirm your customer has an ABN and is registered for GST by:

    For more information on how to determine if a purchaser is an Australian consumer or an Australian GST-registered business, see GSTR 2017/1: Goods and services tax: making cross-border supplies to Australian consumers.

    You should only charge GST on sales to GST-registered businesses if the sale is connected with Australia for other reasons, such as when the sale is made through a business you run in Australia.

    Even if you sell services that are performed in Australia, GST does not apply to your sales to an Australian-based business recipient if you are a non-resident who does not make the sale through a business you run in Australia. For more information, see GST on cross-border transactions between businesses.

    See also:

    Impacts for your customers if you incorrectly charge GST

    If you incorrectly charge GST on these sales, this may disadvantage your GST-registered business customers as they may:

    • be unable to recover the amount as a GST credit if you have Simplified GST registration
    • still be liable for GST on their purchase under the reverse charge.

    Access to GST credits

    In most cases, GST-registered businesses are able to claim back GST credits when they pay GST for business purchases.

    These businesses can only claim a GST credit if they have a tax invoice (unless the amount they paid is $82.50 or less). To be a tax invoice, the document must have the supplier’s ABN.

    However if you are registered in the Simplified GST system (rather than the standard GST system), you have an ARN instead of an ABN. This means you cannot issue a tax invoice.

    If you do not have an ABN, your GST-registered business customers will not be able to claim a GST credit for GST that was incorrectly charged if the amount is over $82.50. Instead, they may seek a refund of the GST from you.

    If you have incorrectly charged GST on these sales and already paid the GST to the ATO, you can only obtain a refund if you have reimbursed your customer. You can do this by reducing the amount of GST payable in your next return.

    Paying GST under the reverse charge

    In some cases, your GST-registered customer may need to pay GST on their purchase because of the reverse charge rules.

    This will happen if they would not be entitled to a full GST credit if GST had been charged on the sale – for example, if they are purchasing the item to make input taxed supplies, like financial supplies. Input taxed supplies are equivalent to ‘exempt' supplies in other jurisdictions.

    If so, your customer will need to pay GST in their activity statement lodged with the ATO (they may claim a partial GST credit for the purchase at the same time, to the extent they are entitled to do so).

    In these circumstances, even if you issue a tax invoice because you are registered in the Standard GST system, the customer will still need to pay GST through the reverse charge. This can result in your customer paying GST on their purchase twice.

    Last modified: 23 Jan 2018QC 54417