GST on overseas subscriptions and software: what you can and cannot claim

Why some overseas suppliers charge GST and others do not

Since 2017, overseas businesses that sell digital products and services to Australian consumers have had to register for GST once their Australian sales pass $75,000. That is why Netflix, app stores and most big software companies add 10% to their Australian prices.

The rule is aimed at consumers. If the buyer is an Australian business registered for GST, and tells the supplier so by providing an ABN and a statement that it is registered, the sale is treated as business-to-business and the overseas supplier does not have to charge GST. Many suppliers have a field in the billing settings for exactly this. Fill it in, and your invoices will usually drop the GST line.

So the same product can arrive on your statement with GST or without, depending on what you told the supplier. Neither is wrong. What matters is that your BAS claim matches the invoice.

Three kinds of invoice you will see

A tax invoice with Australian GST and an ABN. Suppliers with a local entity (Canva is Australian; Google, Microsoft, Adobe and Apple bill Australian business customers through arrangements that produce a proper tax invoice) issue a document that says Tax invoice, shows an 11-digit ABN and states the GST amount. You can claim that GST on your BAS in the normal way, for the business-use share.

An invoice with no GST. Common once you have supplied your ABN, and standard for smaller overseas tools that are under the threshold or simply do not bill Australians separately. There is no GST to claim. The full amount is still a deductible expense for income tax; it just contributes nothing to label 1B.

A receipt showing GST but no ABN. Overseas suppliers can use a simplified GST registration for non-residents. They charge and remit GST, but they are not allowed to issue tax invoices and their customers cannot claim GST credits on those purchases. The document usually shows an ATO reference number rather than an ABN. If you are seeing this on a business subscription, give the supplier your ABN and confirmation that you are GST registered. They should stop charging GST from then on. Do not claim the GST already charged; the ATO’s position is that it is not claimable.

The reverse charge, briefly

You may read about a reverse charge on imported services. In plain terms: if a GST-registered business buys a service from overseas with no GST on it, and the purchase is not fully for business use, it may have to account for GST on the private portion itself. For a subscription used entirely for business there is nothing to do. For a mixed-use one the amounts are usually tiny, but if you have large overseas purchases with private use, ask your accountant.

How it goes on the BAS

• 1B (GST on purchases): only the GST shown on a valid tax invoice, at your business-use percentage. A $110 tax invoice for a tool used 100% for business adds $10. A $55 invoice with no GST line adds nothing.
• G11 (non-capital purchases), full BAS only: the ATO’s guidance is to report purchases that have GST in them; if you are on the simpler BAS you will not see this label at all.
• Income tax: the whole business share of the expense is deductible regardless of GST, claimed in your tax return, not the BAS.

When FlowFi categorises an uploaded statement it looks at the merchant and flags overseas subscriptions so you can confirm whether GST applied. Correct it once and the rule sticks for the next charge. See how to calculate GST for the divide-by-11 maths and BAS labels explained for where each figure sits.

Low-value imported goods

The same logic applies to physical goods worth $1,000 or less bought from overseas sellers and marketplaces, which have carried GST since 2018. If the marketplace issues a tax invoice with an ABN, claim the GST on the business share. If it charges GST under the simplified system, you cannot. Goods over $1,000 are taxed at the border instead, and the GST on the import declaration is claimable if the goods are for your business.

A ten-minute clean-up

Go through your billing settings for every overseas tool you pay for and add your ABN with the GST-registered statement where there is a field for it. That stops unclaimable GST from being charged in the first place. Then, on your next statement, check each recurring overseas charge once: tax invoice with ABN, no GST, or simplified receipt. Record the answer in your bookkeeping so every future quarter follows the same rule.