Quick GST Question

[tinseltown]

I just want to clarify something and figured some of you could help.

Is it true that if I as an Australian Retailer sell something to someone outside of Australia, that I don't have to charge or pay GST for that item?

In Short:

Within Australia = GST

Outside Australia = No GST

Is this correct?

[dferguson]

This is correct.

If the product is delivered to an International destination then its classed as an EXPORT and is GST free.

ezimerchant by default will not charge GST for international sales.

[christof]

Yep, I can vouch for David, there is no GST on exports... It's one of the few good things about the GST. I sell my sleep mask all over the world and I always get the GST I spend making the sleep mask back every time I submit the quarterly BAS.

Chris

[mick]

Chris, can you explain how you manage this. I understood that the GST spent on manufacturing a product is only credited against GST collected in sales, not actually given back as dollars. This means that you must charge GST somewhere along the line to be able to claim against GST spent.

Is it that the GST collected on sales in Australia covers all GST spent ?

If you don't separate domestic and international sales in Ezimerchant as far as tax goes, does this mean that you have to manually track Australian sales and include GST in the sale price, effectively reducing the Australian price ?

Thanks Chris, i'll be interested in your reply,
Mick

[christof]

G'day Mick,

A good point... To explain further though, my accountant grabs all the figures and plugs them into the BAS & we always come up with a refund - so GST paid doesn't seem to have to be offset against any GST collected. Obviously I'm no tax expert, but I vaguely seem to remember him calling the tax office to confirm it while I was there in the office with him. He also said that it was probably only a matter of time before I was audited, the tax office are always curious about businesses (particularly exporters & medico's) that don't collect GST!

With the GST collection question, I do manage Australian sales manually and I absorb the GST into the price. Australian sales only make up a tiny percentage every quarter - perhaps 5-6 in total so it's no problem calculating how much I've collected.

Hope this helps... (I'd certainly recommend getting an independent opinion just to be on the safe side - but for me, I'm comfortable with the situation as it stands now).

Chris.

[add2it]

Hi everybody,

I know I am jumping in here late... I just have a quick question:

Does it matter what products or services you export to be GST free?

In my case I sell software products that are delivered online, programming, installation and troubleshooting services as well as advertising services to customers mostly from outside Australia.

I also wonder if a part of what I earn in commissions from companies outside Australia is considered GST?

[niko]

Generally a product purchased has to have GST paid by the merchant. If you are a software vendor you are not buying the software as you produce it. Be aware that when you sell it within AU the GST is for the whole amount as there is no buy component in the product. If you sell overseas a product you had to pay GST then in the BAS there is an option to input non GST items but you cannot divide your total sales that include GST and non GST charged items by 11 to come up with a GST figure. You have to exclude the items that had no GST in your claim.


If you have a BAS statement in front of you it will help.

G1 is total sales for sales inside and outside AU. if you are exporting goods overseas, to make life easier for you make total sales figure Ex GST and tick the NO for the question below it.

G2 Export sales is the portion of the total sales noted in G1

G3 is for non GST sales other than export (some products do not have GST component, i.e, an unprocessed chook). This figure is also a portion of the total sales

G10 Capital Purchases ex GST

G11 Non Capital purchases ex GST

1A is the GST you charged on sales and 1B is the GST you had to pay.


Example

As a reseller you buy a GPS for $200, you pay $20 GST.
You sell the GPS for $330 Inc GST,
You can deduct the tax you charged to the tax you paid. ie $30 - $20 = $10 goes to the tax man.


If you also buy a MP3 player that was sold overseas, example:
Bought with GST at $220 and sold for $300 Ex GST


GPS plus MP3 purchase is $440 INC GST and total sales is $660

GST paid = $40
GST charged is $30

Thus you get a refund of $10.


However if you added the sales figure up in G1 with GST and divide by 11 to get the GST figure and transplant that figure in 1A you will overpay the taxman by $10.



In reply to addit2, commission has nothing to do with GST or BAS. Earnings are sorted at the end of year when you do your personal tax. The fact that you only get commission and that you don't buy the goods, it's regarded as earnings thus you will be paying a healthy personal tax at the end of the year, assuming your going to declare it :)

[niko]

David
I need to clarify an issue I have. A guy in Alberto, Canada wants to buy 2 products from my web but he says it doesn't work for him. I haven't ascertained the address he is asking it to be delivered to but he emailed and phoned stating he wants me to have them sent to a mate in QLD who will then take them to Canada.

If I am correct he is most likely placing delivery to Qld and yet he is ordering overseas thus the system will stop him from buying without GST.