FoderisGST on SaaS Sales to Overseas Customers: What Australians Owe
If you run an Australian SaaS or digital product business, a good share of your customers may live overseas. The good news is that most of those sales are GST-free. The catch is that you need to be able to show why each one is GST-free, and sales to Australian customers still include GST. This guide covers the rules, the evidence to keep and what to do when the evidence points in different directions.
In short
- Services and digital products supplied to a non-resident who is not in Australia are generally GST-free exports.
- Sales to customers in Australia are taxable: the price includes 10% GST, which is one eleventh of the GST-inclusive amount.
- Keep evidence of where each customer is: billing country, card issuing country and IP country are the usual ones.
- If the evidence conflicts, look at all of it, ask the customer if you need to, and charge GST when you cannot support an overseas location.
- GST-free export sales still count toward your GST turnover and are still reported at G1 on your BAS.
When a SaaS sale is GST-free
The ATO’s page on exports and GST explains that exports of goods and services from Australia are generally GST-free. If you are registered for GST, that means you do not include GST in the price, but you can still claim GST credits on the business purchases you use to make those sales.
For services and digital products, the rules sit in section 38-190 of the GST Act. The two tests most SaaS businesses rely on are:
- Non-resident outside Australia: the supply is made to a non-resident who is not in Australia when the thing supplied is done.
- Used or enjoyed outside Australia: the customer is not in Australia when the thing is done and the effective use or enjoyment of the service happens outside Australia.
A software subscription bought by a company in Germany for its team in Berlin, or by a consumer in Canada, will usually fit. There are exceptions, including where an overseas customer pays but the service is actually provided to someone in Australia. The ATO’s example is a school that bills overseas parents for tuition given to students in Australia: that supply is not GST-free. If an overseas business buys seats in your product for staff based in Australia, check the current ATO guidance before treating it as an export.
Sales to Australian customers include GST
If you are registered for GST, a sale to a customer in Australia is a normal taxable sale. Your price is treated as including GST, so the GST is the price divided by 11. This applies to Australian consumers and businesses alike. Business customers can usually claim the GST back, so for them the GST is not a real cost.
The evidence to keep
The ATO’s own example on the exports page makes the point clearly. A creator who sells subscriptions through a platform works out which sales are GST-free by checking which subscribers are offshore. The ATO adds that if she cannot obtain the location of each subscriber, all her sales will be taxable.
So you need a record, for every overseas sale, of why you believe the customer was outside Australia. For an online business, the practical sources are:
| Evidence | Where it usually comes from |
|---|---|
| Billing country | The address the customer enters at checkout |
| Card issuing country | Your payment processor, for example Stripe’s card details |
| IP country | The IP address of the device used to buy, if your checkout or fraud tools record it |
| Business details | A foreign company registration or VAT number for business customers |
The ATO has not published a fixed checklist for Australian exporters of digital services. The closest official guide is GSTR 2017/1, which is written for overseas suppliers working out whether a customer is an Australian consumer. It accepts the information your usual business systems collect, such as billing address, the location of the bank or card issuer and the IP address, and it expects you to weigh all of that information together. That is a sensible model for your own records.
What to do when the evidence conflicts
Conflicts are common. A customer may live in Singapore but use an Australian-issued card, or connect through a VPN that shows a US IP address while their billing address is in Melbourne.
A practical approach:
- Look at all of it. Do not rely on one signal if another points to Australia.
- Weigh reliability. A billing address is self-reported; a card issuing country comes from the bank; an IP address can be hidden by a VPN.
- Ask when it matters. For a large or ongoing customer, confirm their country and whether they are a business. Keep the reply.
- Default to GST when you cannot support an export. This follows the ATO’s own example: without a location, the sale is taxable. If you later get good evidence, you can correct it with an adjustment.
- Be consistent. Use the same rule for every sale so your treatment is easy to explain if the ATO asks.
Worked example
A small SaaS business takes A$20,000 through Stripe in a quarter, with prices shown as GST-inclusive in Australian dollars.
| Customer group | Sales (A$) | Treatment | GST (A$) |
|---|---|---|---|
| Australian customers | 6,600 | Taxable | 600 |
| Overseas customers, evidence agrees | 12,900 | GST-free export | 0 |
| Card from Australia, billing in the UK | 500 | Flagged, treated as taxable for now | 45.45 |
| Total | 20,000 | 645.45 |
On a Simpler BAS, G1 (total sales) is A$20,000, because GST-free sales are included. Label 1A (GST on sales) is A$645.45. If the business later confirms the flagged customer lives in the UK, it can treat that sale as GST-free and adjust.
Rounding note: GST is worked out per sale, so your exact total may differ by a few cents from a single division of the total.
Do export sales count toward the GST threshold?
Yes. The ATO’s exports page states that when you calculate your GST turnover, you include export sales connected with Australia, even though they are GST-free. Its example business has A$50,000 of Australian sales and A$50,000 of overseas sales, so its GST turnover is A$100,000 and it must register. See Registering for GST for the A$75,000 threshold.
Questions
Is a SaaS subscription sold to a US customer GST-free?
Usually, yes, if the customer is a non-resident who is not in Australia when the service is supplied, or uses the service outside Australia. Keep evidence of their location, such as billing country and card country.
Do I charge GST to an Australian business customer?
Yes, if you are registered for GST. Being a business does not make the sale GST-free. The customer can usually claim the GST back as a credit.
What if I cannot tell where a customer is?
The ATO’s own example says that if you cannot obtain each customer’s location, the sales are taxable. Treat the sale as including GST until you have good evidence otherwise.
Do GST-free export sales go on my BAS?
Yes. They are part of total sales at G1, but no GST is included for them at 1A.
How Foderis helps
Foderis connects to your Stripe accounts and records the card country and billing country Stripe holds for each sale. Australian sales get GST, overseas sales are marked as exports, and sales with missing or conflicting evidence are flagged on your to-do list for you to decide. Your Simpler BAS figures are then 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.