I'm interesting in hearing what others are doing about GST through overseas payment processors. Specifically, what advice have you received fom your Accountant and have they provided you with any references?

I'm involved in a similar discussion on WHT, and from all the reading I've done it seems clear to me (even though it's not specifically documented) that GST is payable on sales to Australian consumers by an Australian provider, regardless of the payment method used (someone can send you artwork for example, and GST is still payable for the "consideration" of the sale).

Thoughts?

Gary

i am sure that if you are a business registered to claim GST then any customer within australia must pay including GST. For instance we buy servers from the US which dont include GST (of course) then we sell shared and reseller packages to australian clients with GST. This in fact means that we are loosing out a little as we cannot claim for GST on purchases as there is none. We then have to pay 10% to the ATO on the sales we make. So basically we include GST as a cost of sale and dont really pass this on to the customer.

i am not really sure if this is what you are asking or if we are totally correct in doing this. at the moment it is the easiest way for us to cover prices for both australian and international clients. i am also sure that it doesnt matter whether you use an international credit card processor or not. GST still must be collected and paid if the client is Australian.

Yes and no.

Views on the topic are certainly welcome, but I am seeing if I can ascertain what the general/specific advice is from Accountants, to webhosts in Australia, who process payments overseas.

G

Hi Gary,
This is the advise I have received from our accountant and the ATO.

If you sell a hosting package to an overseas client then you do not charge or collect GST from them, nor do you pay GST to the ATO for that sale no matter where the payment system is located.

If you sell a hosting package to an Australian client then you charge and collect GST from them and pay that GST to the ATO no matter where the payment system is located.

I'm not saying this is correct or incorrect only that both the ATO and my accountant claim that that is the way to do it.

Gary,

My accountant needs receipts of payments from the processor ( The bank sends a letter each time they recieve payment from the processor using wire )

From there exported data from the 3rd party processor and i highlight all the Aussie customers and charge from there.

We always lose abit due to rates % and GST but we still got to do it even though we cant claim it back exactly.

Regards
Phillip

This is what we were advised also. For my tax accountant I have to supply a list of australian customers and the amounts they paid..this is just written down. I then tell them the amount of GST and pay it.

Its a simple procedure for me and painless really. I do not need to supply documents from 2checkout, worldpay, paypal or the likes just my own documentation.

I guess if I was ever ordited I would have to show proof of how I arrived at the figures (which I have), but my TAX man don't care...

No, you do not need to pay GST if your payment processor is located outside Australia.

You are not collecting AU currency.

However, when you bring that money into this country it will be subject to other taxes.

Care to elaborate Tux?

With some references to what these other taxes are, and why GST doesn't apply.

Cheers

G

Sorry I don't have reference to any information re: other taxes, but I can tell you that the other taxes are but not limited to income taxes.

To expand on the GST, GST is not about the product or service, its about the currency, even though it's called Goods and services tax, ATO didn't want to confuse us

Yes you sell a product within Australia, and it might be that your client is also Australian, but, and this is the hehe nice thing about overseas processors

When you use these guys they are actually reselling your product for you Hence, the reason your company name does not appear on peoples CC statements.

So this is how it actually works;

You sell an Australian product to them (this voids any GST as they are using a different currency)

They in turn sell back to your client (this voids their tax system)

On the other hand, if a payment processor collects AU currency, then you *must* pay GST, don't confuse this with converting to AU currency, its not the same.

I just went through this with my accountant, thats basically how he explained it to me, certainly was more in-detail but you should get the gist of it.

If you live in NSW (Sydney) I can give you his details he's very good.

Tux, if your accountant told you that then go seek another accountant as that is mind boggling


In my numerous talks with the ATO on this issue and the Dual Taxation Agreement previously, there is no "if or but's" on Taxation and GST other than;

If you are an Australian Registered Business and sell to anyone who purchases from within the borders of Australia (ie: conclude a transaction whether payment by cash, c/card, bags of sugar, whatever else you can think of), then you will be required to collect 10% GST for the total amount of the sale.
Any non resident or visitor outside the boundaries of Australia is not subject to GST collection in any form depsite method or delivery for the conclusion of the transaction.

The utilisation of payment processing and application of taxation is the same as if i sell a computer part to Mr.Bloggs of Houston, Texas and pay Australia Post or Fedex for shipping the item. That payment to the 3rd party would include GST as they are a seperate business in their own right and a seperate purchase in the the chain of doing business. Mr.Bloggs would not be subject to GST in any form.

There is no middle ground or exemptions within the GST system that cover payment methods via 2checkout, Paymate, Merchant account, or any other method, only that the total amount for any item or service includes GST and that the amount has the GST portion of the total sale amount stipulated when dealing with sales made to another party within Australia and it's Territories.

Hope that sort of answers your question Gary.....

Links:

Australian Tax Office
Austlii
Scaleplus
Tax Institute

He was having a lend of you then. It's got nothing at all to do with the currency. You can pay for goods and services with buckets of tennis balls for all the ATO care.

There is still a GST on the realisation of that sale.

Income Tax is another matter altogether. Like the Kiwis, it wont be long before the ATO start using Income Tax Returns to assess overseas transactions.

Some notes from the Tax Reform site:

"If you are registered, or required to be registered for GST, you must include GST in the price of most goods and services that you sell in your business."

"A sale of services and other things is connected with Australia if

- the service or activity is done in Australia"

"Agents
If you act through an agent, the agent’s actions will normally be treated as if they were your own. For GST purposes, it means that if your sales are made through your agent, you are liable for any GST that may be payable, not your agent."

Paysystems/etc don't own your clients. Otherwise your terms and conditions and acceptable usage policies wouldn't apply to them. Paysystems refers to them as "your" client, as did 2Checkout until the guy that runs it tripped over his feet in a similar discussion recently.

If none of this stood true, a client couldn't claim any GST inputs on the payments they are making for services that they onsell to their clients. Of course they're paying GST, by dealing with an Australian business, and they're going to want to claim those inputs back.

G

I was mainly looking for what advice accountants in general are giving. My mother-in-law runs the accountancy firm we use, and someone else hanging from the family tree is up in the GST group at the ATO, so I know which direction we take with it all.

It's just interesting to see so many, here and in a thread on WHT, have been advised differently.

G

I was for the most part of the last 2 years, doing the GST for some automotive workshops in my local area and the term paperwork nightmare comes to mind.

I was a bit suprised initially how many do not know or are ignorant of the basics when it comes to running a business and tax implications of the way they do business.

My cousin's defacto has his accountancy firm in Ballarat so plug his brain on regular intervals to keep up with this stuff as it always helps.

Well, go ahead and pay your GST.

You do NOT collect GST from overseas sales.

I didn't say the processor owns your clients, they purchase your products

Just to add to this, ask if namescout (the domain name reseller for AU domains) prices are GST inclusive, they will tell you no, they do not collect GST.

Why is that?????

You all need to stop listening to the people who want your money.

Good luck to you all