Sorting through the details of tax registration and filing are convoluted at the best of times. When it comes to figuring this out for an eCommerce business, these details can be even more difficult to navigate. However, if you want to get started in the online marketplace in earnest, then you will need to have a grasp of what is legally required with respect to GST.
In some ways, GST registration for eCommerce businesses is not substantially different than for other forms of business structure. However, there are some nuances that you need to be aware of in order to operate within the law. Taking the time to understand these nuances will allow you to charge the right amount of tax when you are obligated to in order to avoid penalties and continue to operate online.
Let’s look at what owners and managers of an eCommerce business need to know about GST.
When Do I Need To Register?
As an eCommerce business operating primarily in Australia, you may need to charge an Australian goods and services tax (GST) on the goods and services you sell. This is a 10% tax that you will need to factor into the price that you are charging for goods and services.
When your business exceeds $75,000 in gross annual income (minus GST), then you will have 21 days to register your business for GST with the ATO. You can also pre-emptively register for GST if you anticipate that your business will pass this threshold in the current fiscal year. If you do not fall into these, and a few other, categories outlined on the ATO website, then you may choose to register for GST as an option, though it is not legally required.
How Do I Register?
Most eCommerce businesses will need to register for GST in the same way as other small businesses in Australia. This process starts will submitting an application for an Australian Business Number (ABN) and then registering for GST either online or by calling an ATO representative.
What Goods And Services Are Exempt?
Depending on what your eCommerce business sells, you may not need to charge much GST or any GST at all. Some items are exempt from coverage under the GST. These items include things like basic foodstuffs, some medical services, certain medicines and many more specific exemptions that may apply to your business. For a complete list, consult the ATO website.
If your business is involved in exporting items for sale, then most will be exempt from GST, though customs duties on either end of the transaction may apply.
Special Considerations For eCommerce
Many eCommerce businesses interact with suppliers and clients at the international level on a regular basis. If you are receiving or sending products abroad, then you need to see what your obligations are for paying or charging GST on these items.
For example, you need to charge GST on the sale of imported services and digital products if you are already registered for GST, if the sale is connected with Australia, and if the sale is made as part of conducting your business. Other conditions may apply as well, so be sure to read the ATO website for the most up-to-date information.
Learn More About eCommerce And GST
The ATO website contains a host of information that will answer most questions that you may have about the process of GST registration for eCommerce businesses. For even more specific information pertaining to your business, get in touch with a tax professional. They will be able to recommend the best course of action for moving forward based on the financials of your business and the specific industry that you are operating in.