FoderisGST on Overseas Software Subscriptions: Your ABN and GST Credits
Most small online businesses pay for a stack of overseas software: cloud hosting, design tools, email, analytics, an AI model or two. Each one raises the same questions: should the supplier charge GST, can you claim it, and does the reverse charge apply? This guide is for Australian businesses that are registered for GST.
In short
- If you are registered for GST, overseas suppliers of services and digital products should not charge you Australian GST, as long as you give them your ABN and state that you are registered.
- With no GST charged, there is no GST credit to claim. These purchases simply do not appear at 1B on your BAS.
- If GST was charged by mistake, ask the supplier for a refund. You can only claim it as a credit in limited cases, usually needing a valid tax invoice showing the supplier’s ABN.
- The reverse charge only applies if you would not be entitled to a full GST credit, for example where a subscription is partly private. Most fully business-use purchases can ignore it.
Give your ABN to overseas suppliers
Since July 2017, overseas businesses that sell services and digital products to Australian consumers, and meet the registration threshold, have had to charge GST. Sales to Australian GST-registered businesses are treated differently. The ATO’s page on Australian businesses importing goods and services says that if you are registered for GST, you should not be charged GST on imported services and digital products you use in your business.
For the supplier not to charge GST, you need to do both of these:
- give them your ABN
- state that you are registered for GST.
In practice, this usually means entering your ABN in the tax or billing settings of each account, often in a field labelled “tax ID” or “business tax number”. Check it whenever you add a tool.
Two cautions from the ATO. Do not quote your ABN for personal purchases: if you do, you must pay the GST yourself under the reverse charge. And penalties can apply if you give false information, such as quoting an ABN when you are not registered for GST.
If your business is not registered for GST, overseas suppliers should charge you GST, and you cannot claim it back.
Why most overseas software has no GST to claim
Once your ABN is on file, a correctly set up overseas supplier charges no Australian GST. Your invoice shows the full price with no GST.
That means there is nothing to claim. The ATO’s GST credits page lists the conditions for a credit, and one of them is that the purchase price included GST. In your books, record these purchases as having no GST. They do not go at 1B (GST on purchases) on your BAS.
This is not a loss: you end up in the same net position as if you had bought locally and claimed the GST back.
When the supplier is actually Australian
Some large providers bill Australian customers through a local entity with its own ABN. In that case the sale is a normal Australian taxable sale, GST is validly charged, and you claim the credit using the tax invoice, just like any local purchase. Check who the supplier is on the invoice, not just the brand name.
If an overseas supplier charged you GST anyway
Some checkouts cannot tell business buyers from consumers, or the ABN was never added.
The ATO’s first step is clear: seek a refund from the supplier by giving your ABN and stating that you are registered for GST.
Can you claim the GST as a credit instead? The ATO says you are entitled to a credit for incorrectly charged GST only if all of these apply:
- you would otherwise be entitled to the credit
- you have a valid tax invoice showing the supplier’s ABN, or the amount paid is A$82.50 or less
- the supplier has not reimbursed you (if they later do, you must reverse the credit)
- you meet the ATO’s remaining condition about the supplier’s GST position, set out on the same page.
The tax invoice is usually the sticking point. Many overseas suppliers are registered under the ATO’s simplified GST system, which gives them an ATO Reference Number (ARN) instead of an ABN. The ATO says that unless a supplier has an ABN, it cannot issue a valid tax invoice, so you may not be entitled to a credit.
So for most purchases over A$82.50 from a supplier with only an ARN, the practical answer is: you generally cannot claim the GST back from the ATO. Get the refund from the supplier and fix your ABN so it does not happen again.
The reverse charge, and why most businesses can ignore it
The reverse charge moves the GST obligation from the overseas supplier to you, the buyer. You pay the GST through your BAS and, where you are entitled, claim a matching credit.
The ATO’s reverse charge page lists the conditions. For imported services and digital products, it applies when you are registered (or required to be registered) and you would not have been entitled to a full GST credit if GST had been charged. The ATO gives two typical reasons:
- the purchase is partly private or domestic
- the purchase relates partly or solely to making input-taxed sales, such as financial supplies or residential rent.
If you are entitled to a full credit, the GST you would pay and the credit you would claim cancel out, so the law does not require you to do it. That is why a typical SaaS or online business using its software only for business can ignore the reverse charge.
Worked example
A GST-registered Sydney studio pays for three overseas tools. All suppliers have its ABN on file, so none of them charges GST.
| Purchase | Annual cost (A$) | Use | GST to report |
|---|---|---|---|
| Cloud hosting | 6,000 | 100% business | None |
| Design tool | 900 | 100% business | None |
| Productivity suite shared with family | 1,000 | 70% business, 30% private | Reverse charge |
The first two need no GST entries at all. The third is partly private, so the reverse charge applies. In broad terms, the studio reports GST of A$100 (10% of A$1,000) and claims a credit for the business share, A$70. The net cost is A$30, roughly the GST on the private part. The ATO page explains which BAS labels to use, and you do not need a tax invoice to claim a reverse charge credit.
The simpler fix in the third case is often to pay for private subscriptions personally, without your ABN.
Questions
Should I give my ABN to overseas software companies?
Yes, if you are registered for GST and the purchase is for your business. You also need to state that you are registered. The supplier should then not charge Australian GST.
Can I claim GST an overseas supplier wrongly charged me?
Only in limited cases. You generally need a valid tax invoice showing the supplier’s ABN, unless the amount was A$82.50 or less. Ask the supplier for a refund first.
Do I need to apply the reverse charge to my software subscriptions?
Only if you would not be entitled to a full GST credit, for example where the subscription is partly private. Fully business-use subscriptions can usually ignore it.
Do overseas software costs go on my BAS?
On Simpler BAS, purchases only appear through 1B (GST on purchases). With no GST charged and no reverse charge, there is nothing to report.
How Foderis helps
Foderis imports your bank file and suggests a category for each line using AI, including a no-GST treatment for overseas software you pay by card. Receipts forwarded by email or uploaded are read by AI, which picks out the supplier, ABN and GST amount, so you can see at a glance whether a bill shows an ABN and includes GST. Your Simpler BAS figures are ready to copy each quarter. Foderis is hosted in Sydney and costs A$9 a month, with a 30-day free trial.
This is general information, not tax advice. Your situation may differ: check with your accountant or the ATO.