A SaaS product is global from its first deploy. The day a Texan customer puts in a credit card, your startup is making cross-border supplies — and Australia’s GST, which feels like a domestic plumbing issue, suddenly has an international dimension. Founders tend to meet these rules twice: once when they ask “do I charge 10% on this invoice?”, and again — often after a Delaware flip — when the company itself becomes the offshore supplier selling back into Australia under the so-called Netflix tax. Both directions live in the A New Tax System (Goods and Services Tax) Act 1999, and both are easier to get right at the billing-system level than to unwind later.
The Baseline
GST is 10% on taxable supplies — supplies made for consideration, in the course of an enterprise, connected with the indirect tax zone (the GST term for Australia, excluding the external territories), by a supplier who is registered or required to be. Registration becomes compulsory once your GST turnover reaches $75,000. For an Australian-incorporated SaaS company selling software it builds here, domestic sales are straightforwardly taxable. The interesting questions start at the border.
Selling Offshore: GST-Free Exports Under Section 38-190
Services and digital products supplied to overseas customers are generally GST-free under the table in s 38-190(1). Two items do most of the work for SaaS:
- Item 2 covers supplies made to a non-resident who is not in the indirect tax zone when the thing supplied is done, broadly where the supply isn’t work on goods or real property in Australia, or where the non-resident acquires it for its business and is neither registered nor required to be registered for GST.
- Item 3 covers supplies to a recipient (resident or not) who is outside Australia when the thing is done, where the effective use or enjoyment of the supply also takes place outside Australia.
GST-free is the good kind of free: you charge no GST but still claim full input tax credits on your own costs. Three practical points matter more than the table itself.
First, evidence. Your checkout and CRM should capture something defensible about where the customer is and whether they’re a business — billing address, country, ABN field for locals. “The invoice went to a .com email address” is not a position you want to defend in an ATO review.
Second, the s 38-190(3) carve-back. A supply isn’t GST-free just because the contract and invoice point at an offshore entity. If you bill a non-resident but the supply is actually provided to another entity in Australia — say, a US holding company buys licences that are really consumed by people in Australia — item 2 can be switched off and the supply dragged back into GST. Since the 2016 cross-border amendments the carve-back generally spares arrangements where the Australian end-user would be an Australian-based business recipient — broadly, a GST-registered business carrying on its enterprise in Australia, acquiring the thing other than for purely private purposes — and the ATO’s current view is set out in Ruling GSTR 2025/1, but global enterprise agreements with Australian seats in them deserve a closer look before you zero-rate the whole invoice.
Third, the turnover trap. GST-free exports still count toward your $75,000 GST turnover. A startup earning $200,000, all of it from offshore customers, must still register — it just remits little or no GST and harvests input tax credits. Founders who skip registration because “we don’t charge GST” are both non-compliant and leaving money on the table.
Selling Into Australia: The Netflix Tax
From 1 July 2017, the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Act 2016 extended GST to inbound intangible supplies to Australian consumers — digital products, streaming, software, and services supplied from offshore. A supply of anything other than goods or real property is connected with Australia if the recipient is an Australian consumer: broadly, an Australian resident who either isn’t GST-registered or acquires the thing outside any business they carry on.
Offshore suppliers who cross the same $75,000 threshold from sales to Australian consumers must register — usually under the ATO’s simplified GST registration for non-residents, which issues an ATO reference number instead of an ABN, runs on quarterly lodgment, and gives no input tax credits. B2B sales are deliberately kept out: the law lets a supplier treat a customer as not an Australian consumer where it reasonably believes so, which in practice means collecting an ABN plus a statement that the customer is GST-registered.
Why should an Australian founder care about obligations aimed at Netflix? Because after a flip, your US parent is the non-resident supplier, and its sales to Australian consumers walk straight into this regime. It also levels the field: your offshore competitors selling into your home market are supposed to be charging the same 10% you are.
Platforms and Merchants of Record
If consumer sales run through an electronic distribution platform — the Apple App Store and Google Play are the canonical examples — the GST liability on inbound digital sales generally shifts to the platform operator rather than the merchant. Merchant-of-record resellers (Paddle and similar) go further, contractually becoming the supplier and taking on GST compliance across markets. Both models trade margin for compliance burden; which trade makes sense is a commercial question, but it should be a conscious one, made alongside the rest of your SaaS customer agreement stack.
Buying Offshore Tools
The mirror image: your AWS, Figma and API subscriptions. Where an offshore B2B supply isn’t connected with Australia, a reverse charge under Division 84 can make the Australian acquirer liable for the GST instead — but only to the extent the acquisition isn’t fully creditable. A startup making ordinary taxable and GST-free supplies would get the credit back anyway, so usually nothing is payable. The practical housekeeping is simply to give vendors your ABN and GST registration details so you’re not charged consumer GST you shouldn’t bear.
Put It in the Contract
Whatever the analysis says today, your terms should say that fees are exclusive of GST and similar taxes with a gross-up clause, and consumer-facing prices should be displayed GST-inclusive where Australian consumer law requires. Cross-border tax treatment changes with your structure, your customer mix and the law itself — so it belongs in the same review cycle as the rest of your terms. Viridian advises SaaS and ecommerce businesses on exactly this intersection of tax-sensitive drafting and commercial terms, and as startup lawyers in Sydney we’d rather configure your billing system correctly at $50k ARR than reconstruct four years of invoices at $5m.
This article is general information only, not legal or tax advice — GST outcomes turn on the precise facts of each supply, and registration and remittance questions should go to your accountant or tax adviser. If your startup is selling across borders, get in touch.
