With the recent launch of Amazon Australia, many overseas suppliers are wondering what registrations they need in order to sell goods on the platform and make the most of the Australia tax system.. Read on...
Amazon has finally launched in Australia giving overseas clients a new opportunity to expand their e-commerce business into new markets. Generally speaking, when doing business in Australia, businesses should have an understanding of the typical business registrations required, as well as any specific requirements set forth by Amazon Australia.
Do I need an ABN to sell on Amazon?
Technically speaking, you do not need an ABN to sell on Amazon. In fact in Australia, it is not compulsory for a business to have an ABN. That said, there may be very good reasons for doing so and we usually recommend obtaining one. You can do so by completing our online ABN registration forms.
Benefits of applying for an ABN
We outline some benefits and instances whereby it may be beneficial to have an ABN for your business.
Registering for GST
If you want to register for Goods and Services Tax (GST), then you will need an ABN first.
Registering for Fuel Tax Credits, Pay as you Go Withholding, Fringe Benefits Tax
For businesses with a stronger presence in Australia there may be a commercial need to register for Fuel Tax Credits (FTC) if you are operating heavy motor vehicles, Pay as you Go Withholding (PAYG) if you are employing staff, and Fringe Benefits Tax (FBT) if you are giving benefits to employees. In our view the majority of Amazon sellers will not require these registration particularly in the early stages of their business here in Australia. If you want to discuss these registrations further please contact us.
Claiming back Goods and Services Tax (GST) on local purchases including Amazon seller fees.
One clear benefit of registering for GST is the ability to claim back GST on purchases made in Australia, including the seller fees imposed by Amazon. For every $110 of local purchases made it is likely you have paid $10 in GST, and thus would be eligible to claim this as a tax credit. To do this you need to be registered for GST. And to be registered for GST you need an ABN. You need to weight up the benefits of being able to claim GST tax credits against the costs and compliance burden of being registered for GST in Australia.
Turnover greater than $75,000 in a financial year?
You must register for GST if your GST turnover from sales that are connected with Australia and made in the course of your enterprise, meets or exceeds the registration turnover threshold of A$75,000 per year. Note however sales you make as a merchant via an EDP such as Amazon do not count towards your GST turnover - this is because EDP operators such as Amazon take responsibility for the GST instead of you.
If you intend to open a bank account in Australia, or if Amazon requires you to open a bank account in Australia, generally speaking you will need a valid ABN to do so.
Due to the above benefits, as well as generally having a better reception from customers and suppliers, we usually advise for businesses to obtain an ABN. It is relatively inexpensive to obtain, and there are no recurring fees. ie it is a one time cost and process.
Withholding in Business Transactions
If you operate outside the Amazon ecosystem and don't quote an ABN to customers on your invoice, they must withhold 47% (from 1 July 2017) from their payment they make to you and send the withheld amount to the ATO. There are some exceptions to this outlined on the ATO website here.
All in all, it is generally worth obtaining an ABN when selling on Amazon. It is fairly inexpensive to obtain, has tax and commercial benefits, and it generally allows your business to be ready for other commercial opportunities that arise. We can assist your business with applying for an ABN and registering for GST.
Phone 1300 226 226 to discuss how we can help.
Please note this article is for information purposes only and does not constitute legal advice. Should you have any queries or require more information, please contact the team at ABNAustralia.com.au.