Video transcript - Doing your business overseas
We’re starting to get orders from overseas, how will this affect our tax?
As an Australian resident, you are taxed on your worldwide income. This means you must report all income you receive from foreign business activities on your Australian tax return.
How tax applies to income you receive from international transactions may depend on whether the transaction involves a country that has a tax treaty with Australia. Currently, Australia has tax treaties with more than 40 countries, including all our major trade and investment partners.
What if we have paid foreign tax in another country?
If you have paid foreign tax in another country, you may be entitled to an Australian foreign income tax offset, which provides relief from your income being taxed twice. Before you calculate your income and deductions, you must convert all your foreign income, foreign deductions and foreign tax paid into Australian dollars.
What about capital gains on our overseas assets?
If you are an Australian resident, your capital gains on overseas assets are treated in the same way as your capital gains on Australian property. If you make a capital gain that is taxable in Australia and you have paid foreign tax on it, you may be entitled to a foreign income tax offset.
What about GST? How does it apply to international transactions?
In broad terms, GST is a tax that will apply to most goods or services that are for consumption in Australia. Generally, you will have to pay GST (goods and services tax) on goods you import into Australia. Exports however, are generally GST-free so you don't include GST in the price of your goods or services. These include goods physically exported from Australia, and services supplied to a non-resident outside Australia.
So if I design a website for an overseas client, this service will not be subject to GST?
That’s right. For more information check out the ATO website or talk to your tax adviser.
This video explains how tax applies to overseas business transactions.