Australia - GST Registration

Implementing the GST was a significant shift in Australia's taxation landscape. Before the GST, the tax system was fragmented, with varying rates and complexities that hindered business operations. The GST streamlined the tax process by imposing a uniform tax rate on most goods and services, enhancing compliance and reducing administrative burdens. 

Over the years, the GST system has undergone several amendments to address evolving business practices and technological advancements, ensuring its continued relevance in the digital economy. Part of the amendments were the changes in the registration process, especially those referring to foreign businesses.

Who Needs to Register?

Not all businesses are required to register for GST, but businesses may face penalties if they fail to register when necessary. Once businesses meet the registration requirements for GST purposes, they should do this within 21 days. Before registering for GST, businesses should obtain an Australian Business Number (ABN).

When to Register for GST

Domestic businesses

Domestic businesses with a turnover of AUD 75,000 or more are required to register for GST in Australia. The threshold for non-profit organizations is AUD 150,000. Additionally, taxi and ride-sourcing drivers should register regardless of their turnover. 

Businesses below these thresholds can opt for voluntary registration, which allows them to claim GST credits on their purchases. However, if businesses voluntarily register for GST, they should stay registered for at least 12 months.

Foreign Businesses

GST applies to foreign businesses selling Australian consumers goods, services, real property, and other items. Examples of taxable sales are digital products like software or e-books sold to Australian consumers, imported services such as professional consulting provided to Australian consumers, and low-value goods imported into Australia with a customs value of AUD 1,000 or less when the price is initially agreed with the consumer, excluding tobacco products or alcoholic beverages. 

Additionally, GST applies to other imported goods for sale in Australia and real property, including land and residential and commercial properties.

Foreign businesses register for GST in Australia once they exceed the GST turnover threshold. The threshold is exceeded if:

1. the current GST turnover for the current month and the previous 11 months totals AUD 75,000 or more or

2. the projected GST turnover for the current month and the next 11 months will likely be AUD 75,000 or more.

Under the same condition, the threshold for non-profits is set at AUD 150,000 or more.

GST Registration Process

Domestic businesses

Once businesses obtain ABN, they can register for GST in several ways:

1. through the Australian Taxation Office (ATO) Online services for business,

2. by phone call to a dedicated number,

3. through a registered tax agent or  business activity statement (BAS) agent,

4. by completing the Add a new business account (NAT 2954) form, businesses can order using the ATO publication ordering service.

When the ATO processes the application, it notifies businesses in writing of GST registration details, including the effective date of registration and ABN details if the business still needs to receive them.

Foreign businesses

Foreign businesses can choose between:

1.  Simplified registration process,

2.  Standard registration processes.

Simplified GST registration

Simplified GST registration is available for foreign businesses, merchants, electronic distribution platform (EDP) operators, and goods re-deliverers. This option is for those who do not need an ABN but make sales connected with Australia, such as imported services, digital products, and low-value imported goods sold to Australian consumers. It allows businesses to register, report, and pay GST quickly and easily online without the need to claim GST credits, including credits for taxable importations.

To register under the simplified regime, foreign businesses should:

1. create an AUSid account for overseas limited registered entities accessing Online services for non-residents to report and pay GST and 

2. complete online registration and create an Online service for non-resident accounts using their AUSid.

Standard GST registration

Standard GST registration applies to foreign businesses that are eligible for or already have an ABN, make sales connected to Australia, wish to issue tax invoices, and want to claim GST credits. To participate in the standard GST system, businesses should register for an ABN, verify their identity, submit their BAS, and pay GST monthly or quarterly. 

It is important to note that electronic registration from outside Australia is not possible, and foreign businesses may need to hire an Australian registered tax agent.

The registration process depends on whether the foreign businesses need to apply for ABN or already have one. If they need to apply for an ABN, foreign businesses should go to the Australian Business Register and apply for an ABN for businesses outside Australia. Foreign businesses should provide additional proof of identity when they apply for an ABN, which should be certified as true and correct copies of the original document by an approved certifier, such as a public notary, embassy, high commission, or consulate.

If foreign businesses already have an ABN, they can complete the registration process by contacting ATO or with the assistance of their Australian registered tax agent or BAS agent.

Backdating GST Registration

In Australia, businesses can apply for GST registration backdates. For tax periods starting on or after 1 July 2012, the backdating of a GST registration is limited to four years. This means that, unless there is fraud or evasion, ATO cannot backdate GST registration by more than four years, and businesses are not required to register for a period before that date.

Penalties for Failure to Register for GST

If businesses fail to register for GST when required, they may be liable to pay GST on sales made from the date they were supposed to register, even if they did not include GST in the prices of those sales.

The penalty for failing to apply for or cancel GST registration when required is 20 penalty units.

When businesses are required to submit or report GST by a specific date but fail by the deadline, they may receive a Failure to Lodge (FTL) on time penalty. Businesses usually first receive a warning by phone or in writing. If ATO should apply an FTL penalty, they notify businesses in writing about the reason for the penalty, the amount of the penalty, and the due date for payment, which is, at the latest, 14 days after the notification is received.

ATO calculates FTL penalties based on the business's size and the time that has passed since the submission due date:

• Small businesses: The FTL penalty is calculated at a rate of one penalty unit for each period of 28 days or part thereof that the return or statement is late, up to a maximum of five penalty units.

• Medium businesses: The FTL penalty unit is calculated at the rate of 2. Businesses with medium withholders for PAYG withholding purposes, assessable income, or current GST turnover between AUD 1 million and AUD 20 million are considered medium businesses.

• Large businesses: The FTL penalty unit is calculated at the rate of 5. Businesses with a large withholder for PAYG withholding purposes or a business with assessable income or current GST turnover of AUD 20 million or more are considered large businesses.

• Significant global businesses: The FTL penalty unit is calculated at the rate of 500. The concept of a significant global business identifies whether a business is subject to various tax and reporting requirements. 

Penalty Unit Amount

Conclusion

Over the years, the Australian GST system has evolved to accommodate modern business practices and technological advancements, including changes to the registration process for foreign businesses. Understanding the registration requirements, thresholds, and processes is essential for domestic and foreign businesses to ensure compliance and avoid penalties.

Source: Australian Taxation Office - Registering for GST, Australian Taxation Office - Non-resident businesses and GST, Australian Taxation Office - Simplified GST registration, Australian Taxation Office - Standard GST registration