• GST cross-border transactions between businesses

    As of 1 October 2016:

    • some transactions between overseas businesses and Australian businesses are not subject to GST
    • GST-registered importers have a new option to calculate transport, insurance and ancillary costs.

    Find out about:

    Non-resident businesses

    We have made changes so that non-resident businesses don't have to engage in Australia’s GST system unnecessarily. This will reduce their overall compliance costs.

    We have:

    • amended the test for ‘carrying on an enterprise in Australia’
    • limited the cases where a non-resident entity must pay GST on supplies of things done in Australia
    • made sure there is no GST liability for certain supplies made between non-residents
    • extended the GST-free (zero rate) rules for certain supplies made to non-residents
    • moved liability, in some circumstances, from overseas businesses to the Australian-based business recipients that are already registered for GST.

    The test for running an enterprise in Australia

    Generally, a non-resident's enterprise must register for GST if:

    • it is based in Australia for more than 183 days in a 12-month period, and
    • has a GST turnover of A$75,000 or more.

    If you are an affected non-resident entity, you need to review your enterprise arrangements in Australia to work out if you need to be involved in Australia’s GST system.

    This could result in some entities registering for GST and others cancelling their GST registration.

    See also:

    We would like to work closely with affected taxpayers to support to meet their GST obligations. If you have any questions, email AustraliaGST@ato.gov.au

    Supplies ‘not connected with Australia’

    Generally, for non-resident suppliers who do not run an enterprise in Australia, the following transactions are no longer connected with Australia and therefore will not be subject to GST:

    • supplies of intangibles (such as services and digital products) which are performed in Australia are not connected if the recipient is an Australian-based business recipient or a non-resident acquiring the intangibles for their overseas enterprise
    • a transfer of ownership of leased goods which are located in Australia, where the transfer takes places between non-residents that do not have an enterprise in Australia
    • a supply of goods where the supplier installs or assembles the goods in Australia, but does not import the goods into Australia.

    Non-resident business turnover for GST

    GST-free supplies are only included in a non-resident’s GST turnover if the supply is made through an enterprise they carry on in Australia.

    Non-resident businesses with an Australian resident agent

    Non-resident businesses and their resident agents can agree the resident agent is liable for GST for supplies made through the agent. Both the non-resident supplier and the agent must specifically agree to this in writing.

    If there is an agreement in writing between the non-resident supplier and the resident agent, notice must be given to the recipient of the supply if they are an Australian-based business. The notice must be given by the resident agent unless the agreement in writing provides that the non-resident supplier should issue the notice.

    The notice must be in the following form, either:

    • a tax invoice for the supply
    • a document with that shows the
      • non-resident supplier’s, or their agent’s, identity and ABN
      • price of the supply
      • amount of GST included in the price
      • date the document is issued, and a brief description of what is supplied.
       

    If there is no agreement in writing between the non-resident supplier and the resident agent, the recipient of the supply may need to account for any GST, see reverse charging below.

    See also:

    Reverse charge for supplies

    Generally, business-to-business intangible supplies done in Australia by non-residents will not be connected with Australia. However, the recipient of the supply may be liable to pay the GST. This is the case if the recipient is an Australian based, GST registered business and acquires it not wholly for a creditable purpose. You acquire for a creditable purpose if you acquire for the purpose of your enterprise and the acquisition does not relate to making input-taxed sales. This is known as reverse charging.

    See also:

    Australian businesses

    More supplies of services by Australian businesses to non-resident businesses will now be GST-free. This reduces the need for a non-resident business to interact with the Australian GST system to claim input tax credits.

    Examples of supplies that may now be GST-free include:

    • when an Australian business makes a supply of training services to an overseas company, but provides those services to one of the company’s employees in Australia
    • when an Australian business supplies repair services to an overseas company, but the supply is provided to an entity in Australia in order to fulfil the overseas company’s obligations under a warranty.

    GST-registered importers

    If you are a GST-registered importer, to calculate the value of the taxable importation for GST purposes, you are no longer required to identify the exact amount paid for:

    • international transport
    • insurance
    • loading or handling
    • service costs for the transport.

    You may opt to use an uplift factor, which is currently 10% of the customs value of the imported goods.

    The Department of Immigration and Border Protection has issued an Australian Customs Notice that further explains this process.

    See also:

    Legislation and supporting material

      Last modified: 17 Feb 2017QC 49217