Aussie Hosts - what about GST on your Aussie customers?
Hi all. This is something I will chase up with the ATO directly soon. But I am just wondering what the Aussie hosts do about sales to Australian customers and GST.
I have looked at a few of the web sites of members here who I know are Aussies and have noticed a couple of different approaches.
1) There is no differentiation on the website - all sales are made in $US most often through a third party CC merchant.
2) There is a different order page for Aussies with prices charged in $AU.
I would have assumed that to be all ridgy-didge with the ATO you would have to go with option 2) and collect GST on sales to Aussies. What are other's understandings, opinions on this?
I know that you don't have to register for GST if your sales are less that $AU 50,000. Is this how those who don't differentiate between AU clients and international clients manage to get away with it?
Similar to Monte, we leave that to the Accoutants. But my basic understanding is that GST is applied to all Australian resident sales and others are reckoned in as Non-GST. PlanetPOS automatically does/did this for sales that went through there, and payments received from Paypal/Revecom/Post/Wire are all sorted each quarter for the GST return.
Doesn't GTS also apply for NZ customers.. I know of a host doing business in NZ & AUS using 2 different sites and it is mentioned on both. All prices are in local currency there, meaning either AU$ or NZ$. One advantage for teh host is you get the exact same amount of money while the customer sometimes pays more/less due to exchange fees ...
Uhhh no the customer pays the exact same amount each month I may get more or less due to exchange rates but the customers account stays the same. In my case with most of my US customers their money goes to the US bank account, OZ customers go to the OZ accounts.
The only downside of that is dealing with businesses which will not give you businesss since you do not have an abn at all, therefore will walk away and take their business elsewhere.
In the case that they decide to purchase from you, then this can lead to an area where pain is only the beginning.
Witholding is required if there is no ABN and the amount is over 50 dollars before GST is applied to the amount, and the business shall be required to withold 48.5 % of the total amount which is to be forwarded to the tax office.
Any business can be prosecuted by law if they do not withold andf may be subject to paying the tax office the amount of witholding, if having paid the supplier the full amount.
There's also implications for Aussie hosts advertising in US dollars who then convert that to Aussie dollars and trying to charge the GST ontop of that - The trade practices act (which the ACCC enforce) maintains a supplier of goods or services must advertise the final price due for a product/service and cannot advertise a rate + gst.
Thanks guys! Very interesting. Just to clarify registering for an ABN and GST are two completely different things. You must have an ABN unless you are carrying out a hobby (for which the ATO does have a definition). If you are carrying out a hobby then there is a form you need to give to your payer so that they don't with-hold 50% from you. Anyway, that's pretty irrelevent for us. The more important thing to note is that of course you need a ABN but you don't need to register for GST until your sales reach $50,000 pa. If you are not registered you don't have to pay the government GST on your sales, but as already mentioned you therefor cannot claim tax credit on the GST you paid on your inputs.
being a host in any form would mean that it's either classified as a part-time or full-time business, therefore hobby is sort of out the door in this regard.
You do not need to have an ABN with income under $50,000 but cannot sell goods and services to other businesses unless you like having 48.5 % being witheld and being sent to the ATO by the buyer. You could get away with just selling to retail customers only, but would also lose in claiming GST paid.
MKelso, I agree that discussion of the tax situation of a hobby is academic as a hosting business is obviously a business and not a hobby. However, you should note that in my post above I mention that there is a specific form/declaration that hobbyists can use when selling to a business that will not require the business to withhold part of the payment. You will find more info at the ATO site - although, as I said, it is an academic issue anyway.
Again, let me clarify that an ABN and GST registration are completely different. You do not need to register for GST if you are making less that $50,000 sales pa. However, if you are in business (as opposed to undertaking a hobby) you do need an ABN regardless of your income.
On resell4less.com we list the prices in both US and AU dollar, and AU amount includes GST, and states such ( which I believe is a legal requirement ). We will be merging our virtual hosting services all into one site and doing a simalar thing. We currently have a .com and a com.au.