International
Cross-border supply
A cross-border supply is a sale of goods or services where the supplier and customer, or the goods and services themselves, are in different countries, and GST depends on whether it is connected with Australia.
A cross-border supply happens whenever a sale involves more than one country. An Australian designer might provide work to a customer in Singapore, a New Zealand retailer might ship goods to an Australian buyer, or an overseas software company might sell a subscription to an Australian household. Each of these can have different GST outcomes, so the first question is always whether the supply is connected with Australia.
For supplies of goods, the connection generally depends on where the goods are delivered or located. Goods exported from Australia are usually GST-free if the export conditions are met, while goods imported into Australia are taxed at the border by Customs, unless they are low value goods dealt with through the supplier or an electronic platform. Goods sold and delivered within Australia, even by an overseas seller, are ordinary domestic supplies.
For services and other intangible supplies, the rules look at things such as where the work is performed, where the recipient is located, and whether the thing supplied relates to land or goods in Australia. A supply of services made to a non-resident who is outside Australia at the time can be GST-free in many cases, but only if the specific conditions in the GST law are satisfied. A supply of real property in Australia is always connected with Australia regardless of who the buyer is.
If you are an Australian business selling across borders, you must decide whether to charge GST, treat the sale as GST-free, or treat it as outside the GST system. Even GST-free exports are reported on your BAS, and you can still claim credits for related purchases, which is a major benefit of the GST-free treatment compared with an input-taxed supply.
If you are buying from overseas, the main concerns are whether the supplier must charge GST, whether the reverse charge could apply, and whether imported goods will attract GST at the border. Many cross-border transactions that were once GST-free now have GST collected through the offshore supplier or the platform.
The most common mistake is treating a sale as GST-free because the customer is overseas, without checking the conditions for the particular type of supply. Another error is not keeping proof of export or evidence of where the customer was when the service was provided. Keep contracts, shipping documents and customer details. This page is general information only, and cross-border rules are detailed, so confirm your situation with the ATO or a registered tax professional.
Worked example
A Melbourne consultant, registered for GST, provides $4,400 of advice to an overseas company with no Australian presence, and the supply meets the GST-free conditions. The consultant charges no GST. On the same quarter's BAS the consultant reports $4,400 in total sales and claims credits on a $660 laptop purchase, including $60 of GST ($660 / 11).
Practical tips
- Document why a cross-border sale is GST-free, for example the contract, the customer's country and the delivery or service details.
- Remember GST-free sales still go on your BAS as sales, and they allow you to claim credits on related purchases.
- Seek advice before you start selling regularly overseas, as getting the GST treatment right at the outset is easier than correcting it later.