Invoicing overseas clients: GST-free exports explained

If you are registered for GST and you supply a service to a client who is outside Australia, that sale is generally GST-free, which means you do not add 10% to the invoice. The ATO’s page on exports and GST puts the test as the supply being used or enjoyed outside Australia, or made to a non-resident who is not in Australia when the supply is made. GST-free is not the same as ignoring the sale: it still belongs on your BAS, and the sale still has to be one the rules actually cover.

That last part carries the risk. The same page notes there are specific rules determining whether a sale of something other than goods or real property is GST-free or excluded from being treated that way, so a supply that looks offshore can still be taxable.

General information, not tax advice. The ATO is the authority - see ato.gov.au or ask a registered tax or BAS agent.

What the ATO’s page actually says

The page puts it as a single test with two limbs, and either limb is enough: the supply is used or enjoyed outside Australia, or the supply is made to a non-resident who is not in Australia when the supply is made. What can still pull a supply out of the concession is the exception in the next paragraph. The page’s own example is a GST registered Australian freelance writer engaged by an English company to write a chapter for a book published in England. He writes it in Australia and sends it to the non-resident publisher, who is not in Australia when the supply is made, so he does not include GST in his invoice.

The failure case is the mirror image, and it is the one people get wrong. Where the service is effectively provided to someone in Australia, it may be taxable even though the person paying the bill is overseas. A foreign parent company paying for work delivered to its Australian subsidiary, or training given to people who are physically here, are the shapes to be careful with.

Exported goods work on a different rule again. The same page says exported goods are GST-free if the supplier exports them from Australia within 60 days of the earlier of receiving any payment or issuing an invoice, with extensions available on request. If you sell goods rather than services, that 60-day condition is the one to plan around.

Because the tests turn on facts about the client and where the benefit lands, a registered tax or BAS agent is the right person to confirm the treatment of a particular engagement before you invoice it, rather than after the quarter closes.

What goes on the invoice

If you are not registered for GST, none of this changes anything: you were never charging GST, the document is a plain invoice, and the reasoning is in how to invoice without GST.

If you are registered, the invoice carries no GST amount on the export sale, and it helps to say so rather than leaving a blank. A line reading “GST-free export of services” or “GST $0.00 - supply to a non-resident outside Australia” tells the client’s accounts department why an Australian supplier is not charging Australian tax, which is a question that otherwise arrives as an email. The ATO’s tax invoices page lists the extent to which each sale is taxable among the details a tax invoice sets out, so marking the sale is consistent with how the document is meant to work anyway. The full field list is in what must be on an Australian tax invoice.

Everything else stays: your name or trading name, your ABN, the date of issue, a description, the amount payable, and payment details. Add the currency explicitly. “Total: 4,500” is ambiguous on an invoice crossing a border, and “Total: USD 4,500” is not. If part of the engagement is taxable and part is GST-free, separate them into their own line items so the split is visible on the document instead of being reconstructed later.

Reporting it on your BAS

GST-free does not mean invisible. GST-free sales are included at G1 total sales, alongside your taxable sales, so your turnover figure reflects all of it.

Under Simpler BAS reporting the GST information is G1 total sales, 1A GST on sales and 1B GST on purchases, so an export sale increases G1 and adds nothing to 1A. Businesses reporting on the full calculation worksheet method have separate labels, with export sales at G2 and other GST-free sales at G3, and the ATO’s step 1: sales page sets out what belongs at each. The quarterly mechanics are in BAS due dates and how to prepare.

One point worth knowing, because it is counterintuitive. The ATO’s GST-free sales page says GST-free sales are sales on which GST is not payable but for which you may still claim GST credits for purchases that relate to them. So the Australian software, equipment and subcontractors behind an export job can still carry claimable credits even though you charged no GST on the sale itself, subject to the usual conditions covered in GST on business expenses.

Evidence that the client is overseas

The treatment depends on facts, and facts you cannot evidence three years later are facts you may struggle to rely on. Keep whatever establishes that the client is a non-resident who was not in Australia when the supply was made, and that the service was used offshore.

In practice that is the engagement or contract naming the client’s overseas entity and address, the correspondence showing where instructions came from and where the deliverable went, the client’s overseas registration or tax number where they have one, and the payment record showing funds arriving from an overseas account. None of these is a prescribed form. They are simply the ordinary documents that, taken together, show what happened.

Australian record keeping rules apply to these records like any other, so keep them for the same period you keep everything else, in a form you could actually produce on request.

Currency, and reporting in Australian dollars

You can invoice in a foreign currency where the client prefers it, but your reporting is in Australian dollars. The ATO’s foreign exchange rates page states that all foreign income, deductions and foreign tax paid must be translated into Australian dollars before being included in your return, and that there are rules about which rate to use, generally requiring conversion at the exchange rate prevailing at the time of the transaction or at an average rate. It notes the ATO has used Reserve Bank of Australia rates since 1 January 2020, and that a reasonable externally sourced rate may be used for a currency not listed.

Two practical consequences. Record the AUD equivalent at the point the transaction happens rather than deciding a rate at year end, because reconstructing it later invites an inconsistent method across a year. And expect the amount you invoiced and the amount that lands to differ, since the rate moves between issue and payment and the sending and receiving banks take their cut. Which of you wears bank charges is worth stating in the quote, because it is otherwise discovered when the payment arrives short.

Getting paid across borders

International transfers are slower and more expensive than domestic ones, and the cost is rarely just the visible fee. There is usually a margin built into the exchange rate as well, so comparing providers on the advertised fee alone understates the difference between them.

What is worth doing regardless of provider: agree the currency and who covers the transfer cost before the work starts, put the invoice number in the payment reference so an incoming amount can be matched to an invoice, and set payment terms that account for transfers taking days rather than hours. Longer settlement times also make deposits more attractive on a first engagement with a client you cannot easily pursue.

How Apsis helps

Apsis stores your ABN, trading name and payment terms once and prints them on every quote and invoice, so a document going to an overseas client carries the identifying detail their accounts team will ask for. Invoices are numbered sequentially with a prefix and voiding keeps the number, which matters when a payment lands weeks later and has to be matched back to a specific document, and the invoice list searches by number, title or client and flags overdue invoices. GST is computed from the line items, so an invoice with no GST on it shows nothing rather than a stray amount, and taxable and GST-free work can sit as separate lines on the same document. Apsis issues documents in Australian dollars only, with no currency selector, so if you agree a price in another currency you will need to convert it before entering the amount and say which currency was agreed in the line description or invoice title. Invoices and clients are on the free plan, which covers 5 clients and 20 invoices a month.