GST for Imports and Exports: A Practical Guide for Service Businesses

GST is one of the most misunderstood areas for Australian service-based businesses. Whether you are a consultant, designer, agency owner, bookkeeper, marketer or coach, you have probably asked yourself some variation of the question. Who do I charge GST to when my client isn’t based here? What if the work is done here but paid for by an international parent company? What if the work is performed here but used somewhere else? Or delivered overseas but ultimately benefits someone in Australia? The confusion is completely understandable.

The biggest misunderstanding is that GST is based on where the money comes from. Many business owners rely on the payer’s address, the structure of the organisation, or their own physical location to determine GST.

There is one principle that determines how GST applies, and it is simpler than most people realise. GST is based on where the service is used or enjoyed. Not where you sit, not where the invoice goes, not which entity pays the bill. The only question that truly matters is whether the service is being used onshore or offshore. Once you understand that, everything becomes clearer.

This guide walks you through GST on international service work in plain English. It explains the common mistakes service businesses make, the difference between GST-free exports and taxable onshore work, how the ATO actually assesses usage, and what documentation you need to protect yourself. If you work with overseas clients, outsource services to offshore suppliers, or have ever been unsure about GST treatment, this guide will help you navigate the rules confidently and avoid unnecessary risk.

Why Service-Based Businesses Commonly Get GST Wrong

A large part of the confusion comes from the assumption that GST applies based on where the supplier is located. If the business is based in Australia, many assume GST must apply by default. If the client is overseas, many assume GST must automatically be removed. These assumptions sound logical but they are not accurate. The ATO is interested in where the benefit of the service is actually received. For many service businesses, particularly those delivering digital or advisory work, the beneficiary is not always as obvious as it seems.

This leads to recurring misconceptions. Business owners often believe that they do not need to charge GST purely because the client has an overseas address or because payment comes from an offshore parent company. Others assume that digital work automatically falls under GST-free export rules. Another common mistake occurs when multinational organisations have both offshore headquarters and Australian subsidiaries, making it difficult to determine where the work is ultimately used.

Incorrect GST treatment creates errors in BAS reporting, affects cash flow planning, and increases the risk of ATO review. The ATO has publicly signalled that GST on services will be a major compliance focus in 2025 and 2026, particularly as technology now makes it easier to detect errors across borders.

The Core Rule: GST Depends on Where the Service Is Used

The foundation of all GST rules for cross-border services is this; GST applies when the service is used or enjoyed in Australia.

GST does not apply when the service is used or enjoyed overseas. It does not matter where you performed the work, where you were physically located, or where your client’s accounts team is based. The only thing that matters is the final location of the benefit.

If the benefit or result of your work is used in Australia, GST is required. If the benefit is used overseas, then the work is GST-free under exported service rules. Understanding this distinction makes it much easier to categorise your transactions correctly. However, there are still nuances that matter when determining where the benefit is truly received.

When GST Must Be Charged

GST is always required when your service is used in Australia, even if the client has connections overseas. This includes situations where the service is delivered here and supports an Australian business, Australian customers, staff located in Australia, or any onshore operations. It also applies when an overseas parent company pays for work that benefits an Australian subsidiary. Many business owners mistakenly remove GST in this scenario because the payer is offshore, but the ATO considers the usage, not the payer.

Even digital or remote services fall into this category. If an Australian resident uses your coaching, consulting, marketing, legal, bookkeeping or IT services, the benefit is received here and GST must be included, regardless of where you happened to be physically located at the time. These rules are especially important for online service providers whose work directly influences Australian-based outcomes.

When GST Does Not Apply

GST does not apply when the service is used overseas. This includes situations where the work is completed in Australia but the results are delivered solely to an offshore client for use entirely outside Australia. For example, if you create a strategic plan for a company’s Singapore operations, or deliver consulting advice exclusively to an overseas team, or design assets used only for an offshore market, the usage is offshore and the service is GST-free. The physical location of the work does not matter. What matters is where the benefit is actually realised.

Similarly, GST is not required when services are provided directly to a non-resident who uses the service entirely overseas. The crucial test is still the same. If none of the benefit is connected to Australia, GST is not needed.

The Grey Areas That Cause Most Errors

The most common GST mistakes occur in situations that initially appear to be GST-free but are not. For example, many global companies have head offices offshore but significant activity in Australia. If your work ultimately supports Australian operations in any way, GST applies. Another frequent issue arises when work is delivered to an overseas contact but is then forwarded internally to an Australian office. Even if the first point of contact is offshore, the service is still used in Australia.

Services connected to Australian assets, Australian customers, Australian employees, or Australian property almost always require GST. These are the scenarios where the ATO most often challenges businesses during audits, and they are worth taking time to understand properly.

GST on Imported Services and Reverse Charge Obligations

Many service-based businesses also purchase services from overseas suppliers. Common examples include software subscriptions, contractors, offshore consultants, digital marketing support, or cloud platforms. These suppliers often do not charge GST because they are not registered in Australia, even big organisations you would expect to be charging GST. So it is always worth checking your invoices thoroughly.

How the ATO Identifies GST Errors in International Work

The ATO now uses advanced technology to review cross-border service transactions. This includes data matching across banks, overseas payment platforms, merchant providers, contractor payments, company registers and even private billing systems. These tools allow the ATO to identify GST inconsistencies far earlier than traditional audits would have picked them up.

Because of this, the ATO expects businesses to maintain clear records showing how they determined whether a service was used onshore or offshore. If you claim GST-free treatment, you need documentation to support that decision.

The Documentation Businesses Should Keep

Every business providing services to overseas clients should maintain clear evidence showing where the benefit of the service was received. This could include contracts outlining that the work is for offshore use, emails confirming that the recipient will use the service overseas, proof of delivery to offshore stakeholders, and internal notes describing the purpose and location of usage. Storing this information inside your accounting software or cloud storage keeps your GST position defensible and reduces the risk of disputes or penalties in the future.

How Bond Financial Helps Service Businesses Stay Compliant

The GST rules for imports and exports are technical, but understanding and applying them does not need to be overwhelming. At Bond Financial, we help service-based businesses simplify their GST classification and set up the correct procedures in Xero. Because we combine bookkeeping, accounting and CFO-level advisory, our clients have one cohesive financial system working together rather than a series of disconnected parts.

Final Takeaway for Business Owners

If your business works across borders, the most important rule to remember is that GST depends on where the service is used. Once you understand that, everything else becomes easier. With the ATO increasing its audit activity and using more advanced technology, now is the time to strengthen your GST processes, clean up your systems and prepare for upcoming payroll reforms.

If you want clarity and confidence around international GST, Sarah and the Bond Financial team can help you get everything set up properly so you can focus on running your business with peace of mind.