International
Non-resident
A non-resident is a person or entity that is not an Australian resident, and the term matters for GST when working out where a supply is connected and who must register.
The label non-resident is used in several tax contexts. For GST, it generally refers to an entity that is not resident in Australia and often that does not have a presence here, such as a foreign company with no Australian office. Whether an entity is a non-resident can affect whether supplies it makes are connected with Australia, whether it must register for GST, and how suppliers should treat sales to it.
A non-resident that makes taxable supplies connected with Australia can be required to register for GST if its GST turnover meets the registration threshold, in the same way as an Australian business. Some non-resident suppliers of digital products and low value goods must register under the simplified system for non-residents. Others may only need to register if they carry on an enterprise in Australia, for example by holding stock here or running local operations.
Sales to a non-resident can sometimes be GST-free. For example, services supplied to a non-resident that is outside Australia when the service is performed can be GST-free in many circumstances, and goods exported from Australia are generally GST-free if the export requirements are satisfied. But the rules are detailed and depend on the type of supply, so you should not treat every sale to a foreign customer as GST-free without checking.
A non-resident of Australia for GST is not the same thing as a foreign resident for income tax. The tests are different. Residency for income tax depends on factors like where a person lives, their domicile and how long they spend in Australia, while GST focuses on enterprise, presence and connection with Australia. A person can be treated differently under each set of rules.
Common mistakes include assuming a customer's overseas address is enough to treat a sale as GST-free, and assuming a foreign company with a local customer base automatically avoids Australian GST. Another is overlooking that the non-resident may have an Australian representative or agent whose actions are relevant. Keep documents proving the customer's status and where services were used or enjoyed.
If you deal with non-residents, record their name, address, ABN or foreign tax identification where relevant, and the contractual terms that show where the supply takes place. These documents help support your GST treatment if the ATO asks. This page is general information, so confirm your situation with the ATO or a registered tax professional.
Worked example
An Australian graphic designer, registered for GST, creates a logo for a US company that has no presence in Australia, for $2,000. If the supply meets the conditions for a GST-free supply to a non-resident, the designer charges no GST, reports the $2,000 in total sales (G1), and still claims credits on related business purchases such as a $330 software subscription, which includes GST of $30.
Practical tips
- Check the specific GST-free conditions before treating a sale to an overseas customer as GST-free. The type of supply matters, not only the customer's address.
- Keep evidence of the customer's overseas status, such as a signed contract or business details, in case the ATO asks how you treated the sale.
- Ask for a signed statement of the customer's residency and location when you supply services to overseas clients, and keep it with the invoice.