How to set up GST on Shopify in Australia

Four things make up GST on a Shopify store. The first is whether your business is registered for GST. The second is how your prices are displayed. The third is what your receipts and invoices show. The fourth is what happens when an order leaves Australia.

This guide explains the Shopify side and the rules we could verify with the Australian Taxation Office and Shopify. It is not tax advice. Your accountant decides whether you should be registered and how to treat unusual sales.

The ATO sets the registration turnover threshold at $75,000 for businesses and $150,000 for non-profit organisations. If your GST turnover, current or projected, reaches the threshold, you need to register. Below it, registration is optional. Many online sellers register early because they can then claim GST credits on what they buy for the business.

You need an ABN to register. If you have one and have registered, add it to your Shopify store so the right details appear and your Shopify subscription is not charged GST. Shopify's help documentation says that for Australian stores Shopify charges 10% GST on your subscription and shipping labels, unless you register for GST and add your ABN to your store.

Australian shoppers expect the price they see to be the price they pay. The ACCC's guidance on price displays says the price shown should be the single total a customer pays, covering taxes and unavoidable fees. For a GST-registered seller selling taxable goods, that means your product prices include GST.

Shopify does this through tax-inclusive pricing, set per market. Shopify's documentation describes two options. Dynamic tax display shows prices with tax included in regions where that is the norm, such as Australia. Show as included lets you manage it yourself, with you setting prices that already include tax.

1. Step 1

   Step 1

   In Shopify admin, open Settings, then Taxes and duties, and enter your ABN and GST registration details where Shopify asks for them.

2. Step 2

   Step 2

   Open Markets and select Australia. In the taxes and duties settings for that market, choose how tax is shown. For most Australian stores, the inclusive option is the right one.

3. Step 3

   Step 3

   Make sure Australia collects 10% GST. Check the tax region and rate shown for Australia, and confirm products are marked as taxable.

4. Step 4

   Step 4

   Decide how shipping is taxed. Shopify's documentation notes that the dynamic tax setting does not change your shipping rates, so shipping needs its own handling.

5. Step 5

   Step 5

   Place a test order and read the checkout, the order confirmation and the admin order page to make sure the numbers add up and GST is shown as included.

• Prices that exclude GST. This shows a lower price than you charge, and the ACCC warns against prices that grow as the customer moves through checkout.
• GST charged twice. It can happen if prices are already inclusive and the store adds tax on top. A test order catches it.
• GST on non-taxable products. Some goods, such as certain basic foods, are GST-free. If you sell them, mark them correctly and check with your accountant.
• Shipping that ignores GST. Charge it the way your accountant tells you, and test it.
• Charging GST when you are not registered. A business that is not registered cannot charge GST. Do not turn it on until you are.

This is part of what we set up in our Launch package, which includes GST, shipping zones and carrier rates. See also Shopify store design.

Under the ATO's tax invoice rules, a customer buying from a GST-registered business can ask for a tax invoice for taxable sales above $82.50 including GST, and you must give it to them within 28 days of the request. A tax invoice has to show certain details, including your ABN, the words tax invoice, the date, a description of what was sold and the GST amount. For a taxable sale of $1,000 or more it must also identify the buyer or show their ABN.

Most consumer orders never need one. Business buyers do, because they claim GST credits on it. If you sell to businesses, set up your order confirmation or an invoice app to produce a compliant tax invoice with your ABN on it. Check the current list of required items on the ATO's tax invoice page, because the exact requirements depend on the sale.

• Add your ABN to the store's legal details and to the invoice or packing slip template.
• Show GST separately on documents you give business customers.
• Keep records of orders and tax collected. Your accounting software, such as Xero, usually syncs from Shopify.

New Zealand is the first export market for most Australian brands. There are two sides to the GST question: what you charge, and what New Zealand requires of you.

Australian GST on exports

The ATO says goods you export are GST-free if you export them within 60 days of the earlier of when you receive payment and when you issue an invoice. So a parcel that goes to a customer in Auckland is usually sold GST-free from the Australian side, and you keep the GST credits on the costs of the goods. Your accountant should confirm how this applies to your sales.

New Zealand GST on low-value goods

Since 1 December 2019, New Zealand has required offshore sellers to register for NZ GST on goods sold directly to NZ consumers where the goods are valued at NZ$1,000 or less, once their sales to New Zealand consumers reach or are expected to reach NZ$60,000 in a 12-month period. Inland Revenue's guidance says sales through online marketplaces do not count toward the threshold, because the marketplace operator generally collects the tax, and sales to GST-registered NZ businesses are also excluded. Goods above NZ$1,000 are handled by customs at the border, with a limited option for sellers to charge GST themselves.

NZ GST is charged at 15%. The documents we cite were published around the law's introduction, so check Inland Revenue's current guidance before you rely on the threshold.

In practice, an Australian brand selling modest volumes to New Zealand can price in NZD with GST excluded on the Australian side. Once NZ sales are heading past the threshold, you register with Inland Revenue and Shopify can show NZ prices with GST included. Shopify Markets is the tool for local pricing and checkout in NZD.

The reverse: overseas sellers into Australia

For completeness, the ATO has applied GST to low value imported goods since 1 July 2018. For goods with a customs value of $1,000 or less, the overseas seller generally has to collect and remit the GST. It matters for Australian shops because overseas competitors now charge GST too.

• ABN and GST registration status confirmed with your accountant.
• ABN entered in Shopify, so the platform does not charge GST on your subscription.
• Australian market set to show tax-inclusive prices.
• Taxable and GST-free products marked correctly.
• Shipping GST tested on a real order.
• Tax invoice template includes your ABN and the GST amount.
• NZ and other export orders tested end to end, including the price shown and the tax charged.
• Accounting integration reconciles with Shopify payouts. Our Shopify payments guide covers payouts.

If you want a second pair of eyes, we check this as part of every build and as part of Shopify support. Contact us if you want an audit of an existing store.

Shopify can display and collect tax, but it cannot decide your tax position. Take this list to your accountant before launch.

• Am I required to register for GST now, or would voluntary registration help me claim credits on my set-up costs?
• Which of my products, if any, are GST-free, and how should I mark them?
• How should I treat shipping charges for domestic and export orders?
• What do I need to keep for exports, such as proof of shipping within the 60 days, so the sales stay GST-free?
• If I expect New Zealand sales to grow, at what point do I need to look at New Zealand GST registration?
• How should my Shopify payouts, fees and refunds reconcile in my accounting software?

Send them a sample order from your test checkout, a copy of your tax invoice template and a payout report from Shopify. It is much quicker for an accountant to correct something real than to describe it in the abstract.

GST is also not a one-time job. When you add products, start selling to a new country or change your shipping, revisit the settings and run another test order.