Foreign Companies Doing Business in Australia: ABN, GST and BAS Guide
Australia is an attractive market for overseas businesses, particularly e-commerce companies selling through Amazon, Shopify and other online platforms.
However, entering the Australian market can create Australian tax and registration obligations much earlier than many foreign businesses expect.
Depending on what your company does in Australia, you may need an Australian Business Number (ABN), Goods and Services Tax (GST) registration and ongoing Business Activity Statement (BAS) lodgements.
In some circumstances, a foreign company carrying on business in Australia may also need to register with the Australian Securities and Investments Commission (ASIC).
These registrations are related, but they are not the same thing.
This guide explains the main Australian registration and tax requirements foreign companies should consider before, or shortly after, commencing business in Australia.
Can a Foreign Company Get an ABN in Australia?
Yes.
A company does not have to be incorporated in Australia to potentially qualify for an Australian Business Number.
A non-resident business may be entitled to an ABN where it is carrying on or starting an enterprise in Australia, or making supplies connected with Australia's indirect tax zone.
This means an overseas company may be able to obtain an ABN while retaining its existing foreign corporate structure.
For example, a company incorporated in Romania, Hong Kong, Singapore, the United Kingdom or the United States may potentially obtain an Australian ABN if its Australian activities satisfy the relevant requirements.
An ABN does not turn the foreign company into an Australian company.
The overseas company remains the underlying legal entity.
Why Would a Foreign Company Need an ABN?
An ABN is an important Australian business identifier.
A foreign company may require an ABN where it needs to:
register for Australia's full GST system
conduct certain Australian business activities
deal with Australian customers or suppliers
issue Australian tax invoices where applicable
lodge Business Activity Statements
claim eligible Australian GST credits
undertake other Australian tax registrations.
Whether the business is actually entitled to an ABN depends on its particular Australian activities.
Simply wanting an ABN is not enough.
What Information Does a Foreign Company Need for an ABN Application?
Non-resident ABN applications can require considerably more supporting information than a standard Australian business application.
Where the foreign company does not have the relevant Australian TFN information, the Australian Business Register may require proof of identity and information supporting the company's Australian business activities.
Depending on the circumstances, this may include:
certificate of incorporation or registration from the company's country of origin
details of the company's directors
identification documents for relevant directors or associates
the company's overseas registered address
details of its Australian activities
an explanation of how the business will operate in Australia
Australian business or trading addresses, where applicable
details of Australian customers, suppliers or marketplaces
information about stock or inventory held in Australia
evidence supporting the commencement of Australian business activities.
Documents that are not in English may also need to be translated appropriately.
Foreign companies should expect their application to receive more scrutiny than a straightforward Australian resident ABN application.
Incomplete identity documentation is a common cause of delays.
Does a Foreign Company Need to Register for GST?
Possibly.
Australia's GST is generally a 10% tax applying to most taxable sales of goods, services and other supplies.
For many businesses, compulsory GST registration is triggered when GST turnover reaches, or is expected to reach, $75,000.
However, determining whether a foreign company needs Australian GST registration requires more than simply converting its worldwide revenue into Australian dollars.
The Australian GST treatment depends on the nature of the supplies and their connection with Australia.
This is particularly important for foreign businesses selling goods into Australia, holding inventory here, providing services to Australian customers or operating through online marketplaces.
Foreign Companies Selling Through Amazon Australia
Amazon sellers are a common example.
Suppose a European company sells products through Amazon Australia and uses Fulfilment by Amazon (FBA).
If stock is imported into and stored in Australian fulfilment centres before being sold to customers, the Australian GST position needs to be considered carefully.
The business may need:
an Australian Business Number
GST registration
appropriate Australian tax records
periodic Business Activity Statements
reconciliation of Amazon settlement reports
records of Australian sales and fees
import and GST documentation.
Do not assume Amazon takes care of every Australian tax obligation simply because sales occur through its platform.
The exact GST treatment depends on the transaction and marketplace arrangements.
What Is the $75,000 GST Threshold?
For most businesses, the general compulsory GST registration threshold is $75,000 of GST turnover.
This is not necessarily the same as:
accounting profit
money transferred to your bank account
total worldwide revenue
taxable income.
GST turnover is calculated under Australia's GST rules.
Foreign businesses should therefore obtain advice before assuming they are below the threshold simply because Australian bank receipts are less than $75,000.
Once a business becomes required to register for GST, registration is generally required within 21 days.
Can a Foreign Business Register for GST Without an ABN?
Australia has different GST registration systems for non-resident businesses.
Certain non-resident businesses making eligible supplies may use Australia's simplified GST registration system.
This is different from full GST registration.
A business using simplified GST registration generally cannot claim GST credits and does not receive an ABN through that simplified registration.
For businesses with more substantial Australian operations, particularly those purchasing goods or services in Australia or seeking GST credits, full GST registration may be more appropriate.
The correct registration method depends on what the foreign business is actually doing in Australia.
What Is a BAS?
Once a business is registered under Australia's full GST system, it will generally have ongoing reporting obligations.
One of the most important is the Business Activity Statement, commonly called a BAS.
A BAS is used to report relevant Australian tax obligations to the Australian Taxation Office.
For a foreign company registered for GST, this commonly includes:
Australian sales
GST collected on taxable sales
eligible GST paid on business purchases
GST payable to the ATO or refundable by the ATO.
Depending on the company's other Australian registrations, additional taxes may also be reported through activity statements.
How Often Does a Foreign Company Lodge a BAS?
Many GST-registered businesses lodge their BAS quarterly, although monthly or annual reporting can apply depending on the circumstances and registration requirements.
For a quarterly lodger, the financial year is divided into:
July to September
October to December
January to March
April to June
The business needs accurate accounting records for each reporting period.
Foreign companies should not wait until the BAS deadline to start reconstructing their Australian sales.
What Records Should a Foreign Company Keep?
Good record keeping is particularly important where the accounting records are maintained overseas.
Depending on the business, we may require:
Amazon settlement reports
Shopify reports
sales reports
Australian bank statements
PayPal, Stripe or other payment processor reports
sales invoices
supplier invoices
import documentation
freight and customs documentation
Australian warehousing expenses
marketplace fees
advertising expenses
inventory records
GST invoices
foreign currency transaction information.
These records allow the Australian GST position to be reconciled properly.
Can a Foreign Company Claim Australian GST
Credits?
A business registered for Australia's full GST system may be entitled to claim GST credits for GST included in eligible Australian business purchases, provided the relevant requirements are satisfied.
Potential examples can include GST incurred on:
Australian professional fees
warehousing
certain freight costs
advertising
software or services
Australian supplier purchases
marketplace expenses
other eligible business costs.
The business needs appropriate documentation to support its claims.
Not every Australian expense automatically gives rise to a GST credit.
Does an ABN Mean the Foreign Company Is Registered With ASIC?
No.
This distinction is important.
ABN registration, GST registration and ASIC foreign company registration are separate matters.
A foreign company may have Australian tax obligations without necessarily having the same corporate registration obligations.
However, if a foreign company is carrying on business in Australia, it may be required to register with ASIC as a foreign company.
A registered foreign company receives an Australian Registered Body Number (ARBN).
Whether a foreign company's activities amount to carrying on business in Australia is a legal question that should be considered separately from whether the company needs an ABN or GST registration.
What Happens if the Foreign Company Must Register With ASIC?
A foreign company required to register with ASIC has additional corporate compliance obligations.
These can include:
registering the foreign company with ASIC
obtaining an ARBN
maintaining a registered office in Australia
appointing a local agent
displaying prescribed company information
notifying ASIC of relevant changes
lodging required annual documents.
Registered foreign companies can also have ongoing financial reporting requirements.
This is significantly different from a foreign company that merely has an Australian ABN and GST registration.
Does a Foreign Company Need an Australian Director?
Not necessarily simply because it obtains an ABN or registers for GST.
However, if the overseas business decides to establish a separate Australian proprietary company, different requirements apply to that Australian company.
That is a different structure from registering the existing overseas company as a foreign company.
Foreign businesses therefore generally need to consider three possibilities:
1. Operate through the existing foreign company
The foreign entity remains the operating business and obtains the Australian registrations it requires.
2. Register the foreign company with ASIC
Where the foreign company is carrying on business in Australia and registration is required, it may register as a foreign company and obtain an ARBN.
3. Establish a Separate Australian Company
The owners establish an Australian company to conduct the Australian operations.
These alternatives can have very different legal, taxation, administrative and reporting consequences.
The cheapest registration option is not necessarily the best long-term structure.
Does the Foreign Company Need an Australian Tax Return?
Potentially.
GST registration and Australian income tax are separate issues.
A foreign company's requirement to lodge an Australian income tax return can depend on factors such as its Australian-source income, whether it is carrying on business in Australia, applicable tax treaties and whether it has a permanent establishment in Australia.
A foreign company should therefore not assume that lodging quarterly BASs satisfies all of its Australian tax obligations.
The income tax position should be reviewed separately.
What About Importing Goods Into Australia?
Foreign businesses importing stock into Australia also need to consider the tax and customs implications of importing goods.
Depending on the arrangements, questions may arise around:
who is the importer of record
customs value
GST on taxable importations
customs duties
freight and insurance
eligibility to claim import GST credits
ownership of stock
Australian warehousing.
These issues are particularly relevant to e-commerce businesses using Australian fulfilment centres.
Common Mistakes Foreign Companies Make
One of the biggest mistakes is waiting until Australian sales have become substantial before considering registration.
Other common problems include:
assuming an overseas company cannot obtain an ABN
confusing an ABN with an ARBN
registering for the wrong type of GST
missing the GST registration threshold
failing to lodge BASs after GST registration
reporting bank deposits instead of properly calculating GST turnover
failing to retain Australian tax invoices
not reconciling marketplace settlement reports
assuming Amazon or another marketplace handles every GST obligation
failing to consider ASIC registration
ignoring Australian income tax obligations
failing to consider the implications of holding inventory in Australia.
Correcting historical registrations and BASs can be considerably more difficult than establishing the Australian tax arrangements correctly from the beginning.
A Practical Example
Consider a Hong Kong company that sells consumer products through Amazon.
The company begins selling to Australian customers and later starts holding inventory in an Australian Amazon fulfilment centre.
As Australian sales increase, the company exceeds the relevant GST registration threshold.
At this stage, the company should not simply register for GST and assume the job is finished.
Its Australian position may require consideration of:
ABN entitlement and registration.
Full or simplified GST registration.
The effective date of GST registration.
Historical Australian sales.
BAS lodgement obligations.
GST credits.
Amazon settlement and transaction reports.
Australian inventory and imports.
Whether its activities amount to carrying on business in Australia for ASIC purposes.
Whether Australian income tax obligations arise.
This is why foreign business registrations should be considered as part of the overall Australian operation rather than as isolated forms.
How Dolman Bateman Can Help Foreign Companies
Dolman Bateman is an Australian Chartered Accounting firm based in Sydney.
We can assist overseas companies entering or operating in the Australian market with:
Australian Business Number applications
foreign company ABN registrations
GST registration
GST registration reviews
Business Activity Statements
ongoing quarterly BAS preparation and lodgement
Amazon and e-commerce accounting
Australian GST compliance
historical BAS and GST issues
Australian income tax compliance
liaison with the Australian Taxation Office
ongoing Australian accounting support.
For foreign companies, establishing the correct registrations from the outset can prevent substantial compliance problems later.
Selling or Doing Business in Australia?
If your overseas company sells products or services in Australia, stores inventory in Australia, sells through Amazon Australia or has exceeded the Australian GST registration threshold, we can review your Australian registration and tax obligations.
Contact Dolman Bateman for assistance with your Australian ABN, GST registration and ongoing BAS compliance.
This article provides general information only. Australian tax, GST and corporate registration requirements depend on the particular activities and circumstances of the foreign company. Professional advice should be obtained for your circumstances.
