The Australian Tax Office (ATO) charges a broad-based goods and services tax (GST) of 10% on most sales to local customers. There are exemptions and concessions to this general standard for some purchases, including some basic foods, medical care, and health products.

As more people turn to platforms to find what they need as customers, the ATO has modernized tax law to account for more complex transactions through both foreign and local marketplaces.

In this guide, you’ll learn how to account for GST as a marketplace or a seller operating in Australia. We detail your tax obligations and liability based on the latest regulations, including details on market-specific language and nuances.

Defining the relevant terms

The ATO refers to marketplaces that might have sales tax collection obligations as “electronic distribution platform (EDP) operators.” People working in related industries often simplify the term, referring to marketplaces as “platforms.”

Regulations describe EDP operators as including but not limited to websites, internet portals, gateways, stores, or marketplaces. They meet three criteria:

• Enabling businesses to make supplies available to purchasers
  
• Allowing both purchasers to make an offer for an item and sellers to accept orders from purchasers
  
• Delivering the service electronically
  

In Australia, a marketplace is not an EDP operator if it solely builds or maintains the infrastructure that offers goods or services to purchasers. For example, a website operator with shopping cart functionality for third-party sales is an EDP operator, but the service provider that built that website is not.

There are also a few exceptions to these general guidelines. The following are not EDP operators:

• A carriage service, including internet providers, telephone services, and broadband
  
• A payment system or payment processing service
  
• A service of providing vouchers, which are not taxable
  

Scope of marketplace tax collection obligations

Types of transactions

If the ATO requires that an EDP operator collects GST on a sale, Australian law treats the operator as the entity making this sale. EDP operators are only obligated to collect sales tax on sales of imported low-value goods (i.e., products with a customs value of $1,000 or less) to customers, or sales of digital services by foreign businesses to Australian customers. There are exceptions to this law based on the level of involvement a platform has in completing every aspect of the sale.

An EDP operator is not responsible for GST if it meets all of the following criteria:

• It does not authorize the charge to the recipient of the product or service.
  
• It does not authorize delivery of the product or service.
  
• It does not set any of the terms and conditions under which the sale is made, directly or indirectly.
  
• The purchaser receives documentation that both identifies the seller and defines the seller as the supplier of that product or service.
  
• The seller and the EDP agreed in writing that the seller is liable for collecting and remitting sales tax.
  

Types of taxes

In Australia, EDP operators are only liable to collect GST, not other kinds of taxes.

Voluntary tax collection obligations

An EDP operator can take responsibility for collecting GST on sales made by Australian businesses through its platform if the sale involves digital products or services. In that case, the EDP operator needs to be registered for GST and have a written agreement with the seller about tax liability before the transaction happens. Some EDP operators choose this option to simplify their accounting and manage digital sales to Australian customers consistently, regardless of whether the seller is based abroad or locally.

Tax registration obligations

Australia requires that an EDP registers if its taxable sales to Australian customers exceeded $75,000 AUD in the past 12 months, or if the EDP expects sales to exceed that amount in the next 12 months.

Tax reporting obligations

EDP operators must report all sales that they were required to collect taxes on in their tax returns. The new Sharing Economy Reporting Regime (SERR) requires that EDP operators report on all taxable sales every six months, not just in their tax returns. As of July 2023, these transactions include ride-sharing and short-term accommodation. From July 2024 onward, reporting requirements also include the hiring of assets and services made through the platform, including storage or business spaces, food delivery, and professional services.

Invoicing considerations

Australian law does not require that platforms issue tax invoices for sales they need to collect and remit GST on.

Marketplace sellers

Tax registration

If a seller abroad only sells their products or services to Australia through platforms—and the EDP operator must collect GST on these sales—the seller does not need to register for GST in Australia. If a foreign business makes direct sales to Australian customers (not just through a third-party platform), it does not need to count these platform sales toward the registration threshold.

Tax collection obligation

In some circumstances, the EDP operator and the seller can make a written agreement that the seller is responsible for collecting GST, but only if the EDP operator fits all of the following profile:

• The EDP operator does not authorize the purchaser’s payment.
  
• The EDP operator does not authorize delivery of the product or service.
  
• The EDP operator does not set any of the terms and conditions of the supply, directly or indirectly.
  
• The purchaser receives a written document identifying the product or service and characterizing the seller as the supplier.
  

Tax reporting obligations

Sellers are not required to include sales that an EDP collected GST on in their tax returns.

How Stripe can help

Stripe empowers EDP operators to build and scale powerful global payments and financial services businesses with less overhead and more opportunities for growth. Stripe Tax reduces the complexity of global tax compliance so you can focus on growing your business. It automatically calculates and collects sales tax, VAT, and GST on both physical and digital goods and services in all US states and more than 40 countries. Stripe Tax is natively built into Stripe, so you can get started faster—no third-party integration or plug-ins are required.

Stripe Tax empowers EDP operators

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or by adding tax collection to Stripe no-code products, such as Invoicing, with the click of a button.
  
• Register to pay tax: Stripe Tax provides links to the websites where you can register once you meet a state or country’s tax registration requirement.
  
• Automatically collect sales tax: Stripe Tax calculates and collects the amount of tax owed. It supports hundreds of products and services, and it is up-to-date on tax rule and rate changes.
  
• Simplify filing and remittance: With our trusted global partners, users benefit from a seamless experience that connects to your Stripe transaction data—letting our partners manage your filings so you can focus on growing your business.
  

Learn more about Stripe Tax.