A business that sells to Australian consumers and ignores GST does not get the benefit of the doubt. The Australian Taxation Office (ATO) can register it without being asked, estimate the tax owed from the transaction records of Australia’s four major banks, add a 75% penalty and 11.51% annual interest, and register the debt in a court in the seller’s own country. None of this requires the seller to have ever set foot in Australia.
Few saw it coming. When a Senate committee examined GST on low-value imports in April 2017, a witness for CPA Australia was blunt: “This tax is voluntary. It is largely unenforceable. It will raise very little revenue.”
Nine years later, more than 3,000 non-resident businesses are registered. Cross-border supplies brought in nearly A$1.9 billion in GST in 2024–25 alone. And the ATO says the reforms have generated “more than $10 billion.”
VATabout put 14 questions to an ATO spokesperson in an exclusive written interview. They cover how the regimes are run, how the ATO finds unregistered suppliers, what happens to those that refuse to pay, and what a business that has missed its obligations should do. The answers follow, with context drawn from the ATO’s published reports and the parliamentary record.
The Rules: Two Measures, a Year Apart
Since 1 July 2017, GST applies to imported services and digital products sold to Australian consumers, such as streaming, e-books, games, apps, software, and subscriptions, under the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Act 2016.
From 1 July 2018, the Treasury Laws Amendment (GST Low Value Goods) Act 2017 added GST to imported goods with a customs value of A$1,000 or less, which had previously not been taxed at the border. The registration threshold is the domestic one: A$75,000 of GST turnover from supplies connected with Australia, digital and goods counted together.
The forecasts were modest. Treasury's regulation impact statement modeled the digital measure's compliance costs on "approximately 100 non-resident businesses" and put the revenue at "around A$350 million" over the forward estimates – "less than 1 per cent" of GST. On low-value goods, Treasury officials told the Senate committee that the A$300 million forecast "represented a collection rate of about 27 per cent." The budget assumed most of the tax would never arrive.
The goods measure had a rough passage. Amazon told the Senate committee that in any week more than a thousand suppliers would be caught, "many of which would have little or no incentive to charge their customers GST." The committee recommended a year's delay, which is why the start date is 2018 and not 2017. The Productivity Commission then looked at the alternatives and reported in November 2017 that "the legislated model is the most feasible among the imperfect alternatives at this time." Not a ringing endorsement. It also asked for a review " five years from commencement, or sooner if triggered by evidence of unduly low compliance, unintended impacts on consumers or adverse trade policy responses."
How the Threshold Compares
Australia is in a small group of countries that exempt small foreign sellers. The OECD's Consumption Tax Trends 2024 lists Australia, Canada, Iceland, Japan, New Zealand, Norway and Switzerland as the OECD countries that "apply a turnover threshold below which non-resident suppliers are relieved from obligations under this regime." The EU VAT Directive "does not allow such a registration threshold for non-EU suppliers." In the UK, the threshold "does not apply" to non-established businesses. New Zealand uses NZ$60,000, Canada C$30,000, Singapore a two-part test (S$1 million global turnover and S$100,000 of sales into Singapore). The OECD's working paper on simplified regimes is relaxed about it: "the adoption of thresholds may be an appropriate solution to avoid imposing a disproportionate administrative burden on small businesses." The Board of Taxation reviewed the goods regime in 2021; the government's one-line summary of that review and a companion one on the R&D tax incentive was that "current settings are working well."
Registration: Most Sellers Choose the Simplified Route
There are two ways in:
- Simplified GST registration gives the business an ATO reference number instead of an ABN. The business becomes a “limited registration entity” that “can’t claim GST credits” and “can’t issue tax invoices.” Returns and payment are quarterly, by SWIFT or card.
- Standard registration is the full domestic process and is what a supplier needs if it wants credits (say, because it imports stock and pays GST at the border).
The ATO’s numbers: about 3,000 non-resident businesses are registered under the cross-border measures, and over 90% chose simplified registration. The ATO says most completed it without staff help in “only a few minutes,” and that switching to standard registration is uncommon. New registrations have “grown annually by an average of 11% over the last five years.”
“Our experience indicates a simpler experience leads to a higher likelihood of compliance.” - ATO spokesperson
The 90% figure matches the Board of Taxation’s 2021 finding that 1,285 of 1,420 goods registrants (about 89.5%) were on the simplified track. It also fits the OECD’s 2018 conclusion that simplified regimes “can work well in practice, achieving a high level of compliance.”
For EU sellers, this may sound familiar, since the simplified registration is Australia’s version of the non-Union OSS and IOSS. This means one online registration, periodic returns, no local establishment. The ATO itself points to the EU as the model’s other user.
However, two differences matter before your first sale. Australia gives a foreign supplier an A$75,000 threshold where the EU gives none, and the simplified track costs you GST credits and tax invoices.
Marketplaces and Redeliverers: The Platform Usually Owes the GST
VATabout asked the ATO to explain, for a non-specialist, who owes the GST when a sale passes through several hands. In its response, the ATO explained that, by default, the merchant is responsible. But when a merchant sells digital products or low-value goods through an electronic distribution platform (EDP), such as an online marketplace, the platform operator is generally treated as the supplier and owes the GST instead.
A redeliverer is a mail-forwarding or personal-shopper service that brings goods into Australia when the overseas seller will not ship there. It may owe the GST if it is the entity that facilitates the goods being brought in and the legislative conditions are met.
The merchant stays liable only if all of the following hold, according to the ATO’s EDP guidance:
- the document issued to the customer names the merchant, not the platform, as the supplier
- the two “agree in writing that the merchant is responsible for paying GST on the sale”
- the platform does not authorise the charge to the customer, authorise the delivery, or directly or indirectly set the terms and conditions.
Miss one, and the platform is the supplier. Payment processors, telecoms carriers and plain advertising services are not EDPs.
Concentration is high. The ATO's 2024–25 GST administration report has "the top 10 non-resident businesses contributing 62% and 77% of the total GST revenue" in digital and goods respectively, and says "The majority of non-resident businesses originate from the United States of America, United Kingdom, Europe, and New Zealand." The platform approach is standard now – the OECD counts "almost all OECD countries" with full platform liability, and the EU's Article 14a deemed supplier rule has run since July 2021.
How the ATO Finds Unregistered Sellers: Outreach First, Then Data
Asked about the most common misunderstanding among first-time sellers, the ATO pointed to awareness: "In some instances, we see a lack of awareness of GST obligations for non-resident businesses required to be registered under the cross-border e-commerce GST measures."
Its response has three parts: direct contact with unregistered businesses, information sessions run with foreign tax administrations and trade associations, and a social media campaign.
The campaign ran for a month in late 2023 on Instagram and LinkedIn, aimed at US and UK businesses. The ATO’s 2023–24 report credits it with close to 3 million impressions and a 56% increase in new non-resident registrants over the following six months. The year’s total was 386 new registrants, up 37%.
For businesses that do not respond to a LinkedIn post, there is data. The ATO says it relies on third-party data from Australian financial institutions and other government agencies, plus information gathered under tax treaties and multilateral conventions.
How much data? The ATO publishes a protocol for each program. The Offshore merchant data-matching program takes aggregated transaction data from ANZ, Commonwealth Bank, NAB and Westpac on "approximately 9,000 offshore merchants each financial year," from 2024–25 through 2026–27: merchant name, country, category code, contact details, and "the total aggregated value of the transactions in Australian dollars for each offshore entity." Nine thousand merchants, against about 3,000 registered. The AUSTRAC program adds international funds transfer instructions and threshold transaction reports through to June 2027. The ATO's compliance page lists customs data, "online investigations to identify websites and businesses" selling into Australia, the returns of compliant suppliers, and information requested under tax treaties and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (151 jurisdictions at the last count).
Tip-offs add to this. The ATO says retailers, advisers, and members of the public can report suspected evasion by phone or online, anonymously if they wish, with whistleblower protections available. The channel is well used: the ATO received 48,917 tip-offs across all taxes in 2024–25.
Penalties and Collection: From Registration Notice to Foreign Court
The ATO says many foreign businesses register voluntarily once they learn of the obligation. For those that do not:
"Where a foreign business does not comply and remit GST on its sales to Australian consumers, the ATO will use the Commissioner's compulsory registration powers, together with default assessments to establish a legal debt. This may include an additional 75% administrative penalty and working with the relevant tax authority to collect the debt."
A default assessment is the ATO's own estimate of the liability, worked up from bank data and whatever else it holds. The 75% "may be increased to 90% of the tax-related liability in certain circumstances for taxpayers who have a pattern of non-compliance." General interest charge runs on top, at 11.51% a year for the October–December 2026 quarter. The compliance page then lists "intercepting funds from Australia that are destined for you," "registering the debt in a court in your country," and, where a treaty allows, asking the home tax authority to collect.
On the cross-border part, the spokesperson said the ATO "may use the Commissioner's garnishee power, seek to enforce an Australian judgment in a foreign jurisdiction, or use an Exchange of Information (EOI) request," and pointed to Practice Statement PS LA 2011/13 on cross-border recovery of taxation debts. A garnishee notice (section 260-5, Schedule 1, Taxation Administration Act 1953) can go to a bank or a merchant card provider – the point where Australian customers' money passes on its way offshore – and "The recipient is legally required to follow the notice."
In 2024–25, this work "directly attributed A$56 million by engaging over 200 non-resident businesses identified through our intelligence and analytics capabilities," according to the annual report. The year before it was $42 million.
Criminal Cases are the Exception
According to the spokesperson, a business that fails to register will generally face administrative consequences first: assessments, interest and penalties. Deliberate evasion, fraud or knowingly false statements can bring criminal offences in addition. The latest ATO prosecution figures, covering all taxes and all taxpayers, are 43 tax crime prosecutions, 38 convictions and 28 custodial sentences in 2024–25.
“There will be no lessening of the ATO’s commitment to ensuring foreign taxpayers are paying the correct amount of tax.” - ATO spokespersons
If You Are Not Registered: Coming Forward Costs Far Less
Asked for the one piece of advice that would keep an overseas supplier out of trouble, the spokesperson said the ATO encourages businesses unsure of their obligations to engage with it proactively. That is not just press-office courtesy. The penalty rules are built to reward coming forward.
Under the ATO's voluntary disclosure rules, a business that discloses a shortfall before it is told of an examination gets most of the penalty wiped: the ATO "will reduce some penalties by 80%," and where the shortfall is under A$1,000, "we will reduce the penalty to nil." Disclosing after an examination has started still earns a 20% reduction where it "can reasonably be estimated to have saved us a significant amount of time or resources." Interest can come down too – the ATO "may reduce this charge if the shortfall amount results from an unprompted voluntary disclosure," though "You may have to ask us to reduce the interest charge and provide additional information." The statutory basis is section 284-225 of Schedule 1 to the Taxation Administration Act 1953.
The Financial Impact in Real Terms
Take an illustrative seller with A$550,000 of GST-inclusive sales to Australian consumers over 18 months – comfortably over the threshold, never registered. The GST inside those sales is one-eleventh: A$50,000.
Found through data-matching, the bill looks like this: a default assessment of A$50,000, an additional 75% penalty of A$37,500, and general interest charge backdated to the quarters the returns were originally due – at the current 11.51% a year, compounding daily, roughly A$28 a day on a debt that size. Around A$90,000, and growing while it stays unpaid.
Come forward unprompted instead and the arithmetic changes: register, lodge the overdue returns, pay the A$50,000, with penalties, if any, reduced by 80% and a case for asking the ATO to remit part of the interest. The tax is the same either way. The difference is roughly A$40,000.
The Revenue: Cross-Border GST Is About 2% of the Total
"Australia's 2017 GST reforms for the digital economy have generated more than $10 billion GST revenue from approximately 3,000 non-resident businesses," the spokesperson said.
The published figures get most of the way there. A Deputy Commissioner put the running total at $7.8 billion in October 2024, part-way through 2024–25; that year finished at A$1,855 million. The 2025–26 report is not out yet.
Year by year, cross-border GST was A$1,205 million in 2020–21, then A$1,355 million, A$1,425 million, A$1,645 million and A$1,855 million. In 2024–25, low-value goods (A$930 million) passed digital products and services (A$925 million) for the first time. Against net GST collections of $90.2 billion, cross-border supplies are about 2% of the total. Treasury's impact statement had said "less than 1 per cent."
The low value goods measure alone raised A$360 million in 2018–19. The Budget estimate had been A$70 million. In 2019–20 it was A$400 million against A$100 million. The Board of Taxation's conclusion: collections "have significantly exceeded original estimates."
On what is still missing, the only official figure is the whole-of-GST one: a net gap of A$8.7 billion, or 9.4%, in 2023–24. The Board of Taxation recorded the ATO's advice that pulling out the low-value goods share "is not practically feasible in light of data gaps and information limitations," and that its compliance work had given it no sense of "significant non-compliance with the LVIG regime at this stage."
Other Countries: Australia Is Now on the Teaching Side
Plenty of countries copied the model early. The IMF’s 2021 technical note counts “over 60 countries” using vendor collection for consumer supplies, and an OECD, World Bank, and ADB toolkit puts the OECD standards at “over 70 jurisdictions worldwide.” The ATO now runs capacity-building programs with tax administrations across the Asia-Pacific region, including Indonesia, Fiji, Sri Lanka and Papua New Guinea.
Key Takeaways
If you run a Business Selling into Australia
The threshold is A$75,000, counted across digital products, services and low-value goods together. Simplified registration takes minutes; the trade-off is no GST credits and no tax invoices, so a supplier with stock in Australia will probably need the full version. If you sell through a marketplace, find out which of you the platform rules make liable – and if it is meant to be you, get that in writing, because the default is the platform. And do not assume nobody is looking. The ATO is collecting bank data on three times as many offshore merchants as it has on its register, and the path from there runs: compulsory registration, a default assessment, 75% on top, interest above 11%, a garnishee notice on your merchant card provider, and a debt registered in your own country's courts.
If you Advise One
Screen clients on Australian consumer revenue across all channels against the A$75,000 line, remembering digital and low-value goods count together. A client that holds stock in Australia or wants credits for import GST belongs on standard registration, not the simplified track. Marketplace sellers need the liability question settled in writing before relying on the platform. And for a client already behind, the order of events decides the cost: a voluntary disclosure made before the ATO flags an examination preserves the 80% penalty reduction and the argument for interest remission; a letter from the ATO ends both.
