VAT Registration in Australia - Tax Consultancy Services in 2022
VAT Registration in AustraliaUpdated on Tuesday 05th April 2022
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Australia applies a VAT system that is similar with the one that can be found in European countries. The difference is that VAT in Australia is named the Goods and Services Tax (GST). This tax applies for all goods and services that are traded at a national level and companies that sell such products in Australia will have to register for VAT in certain situations.
Please mind that the VAT registration in Australia can become mandatory in certain cases for foreign entities that sell goods and services in this country. Considering that there are numerous tax procedures that have to be respected by companies, our law firm in Australia is prepared to help local and foreign businessmen with advice on this matter.
What are the procedures for VAT registration in Australia in 2022?
The Australian tax laws recognize two types of VAT registrations: the voluntary registration and the mandatory registration. The voluntary registration can be done in the case in which you are the business owner of a company that develops commercial activities in Australia and which has an annual turnover of less than $75,000.
In the case in which the company applies for VAT registration, then the company will be issued with a VAT number in Australia, in accordance with the rules of the Australian Taxation Office. As a foreign company, the obligation to conclude procedures related to VAT in Australia may occur if the company delivers products to Australian clients or if the products are brought into Australia.
A company is legally required to register for VAT in the situation in which the yearly revenue reaches a certain threshold. If your company falls under this category, then we invite you to request in-depth tax advice from our team of lawyers in Sydney. With regards to VAT, our Australian law firm has prepared a short list of aspects investors should be aware of:
- the VAT in Australia was introduced in July 2000 and it follows the same system that can be found in the European Union (EU);
- the obligation to register for VAT is imposed when the annual threshold is above $75,000, and this is applied when the turnover of the company is above this sum, or when the company estimates that its turnover will be higher;
- in the case of legal entities that operate as non-profit businesses, the VAT registration in Australia is mandatory when the entity has a turnover above $150,000;
- companies that registered for VAT in Australia will maintain their status of VAT payers for a period of 12 months;
- non-residents who obtain an income from the sale of low value purchases have to register for VAT in the case in which they import goods that have a value above $1,000.
What are the requirements for VAT registration in Australia for foreign companies?
If you represent a foreign company that wants to expand its operations on the Australian market, it is necessary to verify the VAT procedures that will apply to your business activity. It must be noted that VAT can be charged for almost all the economic operations that are prescribed under the applicable law and the most common scenarios when a foreign economic operator needs a VAT in Australia are presented in the list below:
- the VAT is necessary when the economic operator delivers goods on the Australian market;
- the same applies in the case in which the foreign company imports goods on the local market;
- VAT is imposed for the import of various goods which are then assembled in Australia or installed here;
- businesses are charged with the VAT for the exports of goods from Australia;
- the VAT is applied for those who supply property to other entities (this also includes the rental of real estate properties);
- VAT is charged for entities that provide services (most of the services are charged with this tax).
Please mind that foreign companies operating in Australia are required to appoint a tax representative; if you want to expand your business operations in this country and you need tax assistance, our team of lawyers in Australia can help you register with the local tax authorities, obtain the VAT number and further on, once the company starts its activity, to submit its tax returns.
The tax agent that will be appointed by the foreign company has to be an Australian resident – this means that the person representing the company can be a foreigner who has obtained the residency in Australia. It is not mandatory to appoint an Australian citizen, for instance. The main role of the tax agent is to maintain the relation between the foreign company and the local tax institutions.
Is there a simplified VAT registration in Australia in 2022?
In the case of non-resident entities, the local tax law provides the possibility of concluding a simplified VAT registration procedure. This is the case of those who sell online services and digital products on the Australian market, and it also includes those who import goods with a low value.
There is also the possibility to start the VAT registration in Australia for entities that operate as online merchants and electronic distribution platforms operators. Those that qualify for simplified VAT registration can complete the procedure on the online platform of the Australian Taxation Office. If you need to find out more information on the registration steps, you can request more details from our Australian lawyers.
What goods are charged with the VAT in Australia?
If you want to sell goods in Australia and you are interested in finding out what goods benefit from a lower VAT rate or a VAT exemption, you can request in-depth information from our team of Australian lawyers. From the beginning, foreign entities must be aware that the standard VAT rate in Australia is charged at a rate of 10%, a rate that is imposed to most of the goods and services traded at a national level.
For those who want to trade food products there can be various tax advantages, including when we refer to the VAT in Australia, as numerous foodstuffs are exempted from the payment of VAT. Of course, there is a wide list of food products that are charged with the VAT and which are not considered basic food products. For a presentation on the types of VAT charged to foodstuffs, our Australian law firm remains at your disposal.
An exemption on this tax is applied to medical products (a part of the medical products sold on this market), education related services and products (a part, not all), health services and other services and products that are prescribed under the national tax law. Companies can be exempted from the payment of this tax if they sell any of the following goods as well:
- cars and other vehicles designed for disabled persons, as long as the sellers meet all the requirements for such vehicles prescribed by the Australian law;
- the accommodation services offered to elderly persons living in retirement homes;
- the above rule applies for the food offered in retirement homes;
- the supply of international transportation is also exempted from VAT;
- companies that sell goods in the duty-free areas in Australia do not have to apply VAT.
What documents are necessary to register for VAT in Australia?
In the case you are required to register for VAT and you need a VAT number in Australia, you will have to prepare specific documents necessary for this procedure. The papers have to be submitted along with the registration form that is provided by the Australian Taxation Office.
Here, the representatives of companies liable to the payment of the VAT have to present the following papers: the company’s certificate of incorporation, the extract issued by the Trade Register of the country where the company was incorporated, the VAT certificate, and, in the case in which the company will appoint a local representative, such as one of the lawyers working at our law firm in Australia, the power of attorney.
What are the obligations of a company that is a VAT payer in Australia in 2022?
Once a company, be it local or foreign, has registered for VAT in Australia, it will have a set of obligations that have to be completed in due time and following the applicable procedures. Companies are also entitled to specific rights and benefits as VAT payers.
First, the company must know in which category it is included (taxable for VAT or VAT exempted). After determining this, the company must be able to issue invoices accordingly. For VAT payers, the VAT must be shown on the invoice. The overall VAT that is payable to the local tax authorities has to be put aside and then paid to the tax office, no later than the date at which the procedure must be concluded (our lawyers in Australia can offer advice on the tax compliance system).
Another obligation is to submit financial returns at the end of the financial year, which present details on the VAT charged and paid by the company. Companies can also claim credits for the VAT charged in Australia, through a method that can be explained by our Australian law firm.
Provided that you represent a company from a foreign country that issues documents in another language than English, which is the national language in Australia, the above mentioned documents have to be translated into English (an official translation is necessary). If you need more details on VAT registration in Australia, we invite you to address to our Australian law firm, where you can receive advice on other tax measures applicable to businesses.