For exports, the Goods and Services Tax (GST) in Australia works differently. GST is a 10% tax applied to most goods, services, and other items sold or consumed within the country (the indirect tax zone), as well as on most imports of goods.
However, for exports of goods and services from Australia, they are generally considered GST free. For businesses registered for GST, this implies two important points:
- GST Exclusion for Exports: You are not required to include GST in the price of goods and services that you export from Australia. This makes your exports GST free, benefiting your international customers.
- GST Credit for Input Tax Credits: Despite your exports being GST free, as a registered GST entity, you are still eligible to claim credits for the GST included in the price of purchases you use to produce your exported goods and services.
This allows you to offset the GST you pay on your inputs against the GST you collect on your taxable supplies, ensuring a fair treatment of GST across your business operations.
Export of Goods: GST free Treatment and Timeframe
Goods that are exported from Australia by the supplier fall under the GST free category. This means no Goods and Services Tax (GST) is charged on these exported goods.
To qualify for GST free treatment, the exported goods must meet the following criteria:
1. Export within 60 Days: The goods must be exported from Australia by the supplier within 60 days of either of the following occurrences, whichever comes first:
- The supplier gets any payment for the goods.
- The supplier issues an invoice for the goods. If the goods are paid for in instalments, the timeframe applies to the final instalment’s payment or invoice.
2. Request for Extension: Suppliers can request an extension of the 60-day period by contacting the relevant authority through Online Services for Business.
For new boats sold for private recreational use, a different timeframe applies. If the boat is exported from Australia within 12 months, the 60-day period does not apply, and the export remains GST free.
Australia’s Inclusion and External Territories
Australia, for GST purposes, includes all land territory except external territories such as Norfolk Island, Christmas Island, and the Cocos (Keeling) Islands.
The export rules outlined above may also extend GST free treatment to sales of goods to residents of Australia’s external territories, as per the supplier’s determination.
GST free Treatment for Exports of Services and Other Items
Exports from Australia can include various items, such as services, rights, financial supplies, and other professional services, intended for consumption outside the country.
If you provide a service to a recipient outside Australia, and the service is used beyond the country’s borders, it is considered GST free. This means that no Goods and Services Tax (GST) is applicable to these exported services.
However, it’s important to remember that specific rules govern whether the sale of items other than goods or real property, intended for consumption outside Australia, qualifies for GST free treatment or falls under a different GST category.
It is crucial to carefully consider these rules to determine the correct GST treatment for such exports.
GST Treatment of Services Used Outside and Inside Australia
When a service is provided, and its usage or enjoyment occurs outside Australia, or the service is provided to a non-resident who is not in Australia during the supply, it qualifies as a GST free supply.
Conversely, if a service is provided within Australia, regardless of whether the recipient is physically present in Australia or not, it does not qualify for GST free treatment.
Tourist Refund Scheme for Exporting Goods
Tourists, whether foreign or Australian, are eligible for the Tourist Refund Scheme (TRS) if they depart from Australia and carry goods as part of their accompanied luggage. Goods are considered exported if they are carried, worn, or checked into the hold of the aircraft or ship the traveler is using.
For goods to qualify for the TRS, they must meet specific conditions defined under either the GST free Sealed Bag Method or the Tourist Refund Scheme.
To claim the GST refund, tourists must declare the exported goods to Australian Customs and Border Protection Services when they depart from the country.
Repayment of GST Refund
If tourists bring back the goods into Australia after claiming a GST refund under the Tourist Refund Scheme and the combined value of those goods, along with other overseas purchases, exceeds A$900, they will be required to repay the GST refund.
GST is applicable on the entire value of the exported items, not just on the amount exceeding the A$900 limit.
Furthermore, penalties may be imposed for undeclared taxable goods.
Refunds for Residents of Australia’s External Territories
Residents of Australia’s external territories are eligible to claim GST and wine equalisation tax refunds under the Tourist Refund Scheme, if applicable, for unaccompanied goods exported back to their respective home territories.
Registering for GST in Australia
- Operating a Business or Enterprise: You must be actively engaged in carrying on a business or enterprise within the country.
- Reaching the Registration Turnover Threshold: Your GST turnover, which includes sales connected with Australia from your enterprise, should be equal to or exceed the registration turnover threshold of A$75,000 (A$150,000 for non-profit organizations).
- Obligations for Non-Resident Businesses: If you are a non-resident business, registration for GST is necessary to ensure compliance with your GST obligations.
- Including Export Sales in GST Turnover: When calculating your GST turnover, be sure to include export sales connected with Australia, regardless of their GST free status. This ensures accurate assessment of your GST liability and adherence to regulatory requirements.
This article is for general information only. It does not make recommendations nor does it provide advice to address your personal circumstances. To make an informed decision, always contact a registered tax professional.