Running a Subscription Business in Australia: Law, Tax, Cash Flow and Pricing

We'd poured more than $200,000 into my results-guaranteed marketing agency. We had great clients and we were growing. But every dollar was a one-off. We'd win a few projects, max out the team, finish the work, and then I'd sit there wondering how to pay everyone next month.

Feast. Famine. Repeat.

I sold that business. Then I spent the next decade building subscription businesses instead, starting with an e-learning academy my brother and I co-founded.

If you run an Australian business and that feast-or-famine feeling sounds familiar, this page is for you.

It covers the parts of running a subscription business that are specific to Australia: the law (which changes on 1 July 2027), GST, cash flow, accounting, and what recurring revenue does to the value of your business. Everything here is stated as at October 2026, and it's general information, not legal or tax advice. I'll tell you when you need an adviser.

What's different about running a subscription business in Australia?

The subscription playbook itself works the same in Sydney as it does in San Francisco. Pick the right model. Price it on value. Get customers to their first "aha" moment quickly. Keep churn low.

What's different is the rulebook around it.

Let's take them one at a time.

Which subscription models work for Australian businesses?

In The Subscription Playbook I describe eight subscription models: Member Benefits, Consumables, Unlimited Content, Subscription Boxes, Bundled Services, Insurance, Software as a Service and Minimum Commitment. Plenty of them are already running in Australia.

A few local examples:

• Bundled Services. Lavelle Hairdressers packaged four services its clients already bought (cut, blow-dry, shampoo and scalp massage) into a monthly plan called Strength and Shine for $64 a month, when I wrote about it in the book. Clients got what they'd buy anyway and saved money over a year. The salon got predictable income.
• Member Benefits. Catch's Club Catch membership cost $69 a year for free shipping and member deals. After Wesfarmers bought Catch, it became OnePass, which also covers Kmart and Target delivery.
• Consumables. Who Gives A Crap built its brand on recurring boxes of toilet paper delivered to the door, then took the brand into supermarkets. The subscription stayed the loyal core while retail brought reach.
• Software as a Service. Xero, Canva, Atlassian and SafetyCulture are all Australian or Australasian subscription businesses that grew into global names.

The pattern is the same everywhere. Subscriptions work when you sell something people buy often and enjoy. If customers only need you once every five years, a subscription will feel like a trap to them, and that's exactly what the new law is designed to stop.

If you're not sure which model fits, start with the overview of the eight subscription business models, or answer eight questions in the selector below.

Are subscriptions legal in Australia, and what changes in July 2027?

Yes, subscriptions and automatic renewals are legal in Australia. What's not legal is tricking people into them, hiding the real cost, or making it unreasonably hard to leave.

Right now, as at October 2026, three parts of the Australian Consumer Law do most of the work:

1. Misleading or deceptive conduct. You can't mislead people about what they're signing up for, what it costs or how to cancel.
2. Consumer guarantees. Services must be supplied with due care and skill, and "no refunds" policies can't override a customer's rights when something goes wrong.
3. Unfair contract terms. Terms in standard form contracts with consumers and small businesses can be void if they're unfair, and since 9 November 2023 businesses can be penalized for using them (see the ACCC's contracts guidance).

I go deeper on each in Australian Consumer Law and subscriptions and unfair contract terms in subscription agreements.

The new subscription rules

On 6 July 2026 the Competition and Consumer Amendment (Unfair Trading Practices) Act 2026 received Royal Assent. The whole Act commences on 1 July 2027. It adds five things that matter to subscription businesses:

"Small business" here means a standard form contract with a business that employs fewer than 100 people or had turnover under A$10 million in its last income year. So if you sell software or services to other small businesses, these rules probably apply to you too.

Penalties are serious. Since 28 March 2026, the maximum penalty for a company breaching most ACL provisions is the greatest of A$100 million, three times the benefit obtained, or (if the benefit can't be worked out) 30% of adjusted turnover during the breach period.

The full detail, including what we still don't know about reminder timing, is in my guide to Australia's subscription trap laws.

What does the ACCC actually go after?

Three recent cases tell you more than any summary.

HelloFresh and Youfoodz (December 2025). The ACCC alleges that 62,061 HelloFresh customers and 39,408 Youfoodz customers were charged for a first order even though they canceled before the advertised cut-off. Lesson: if you advertise a cut-off, canceling before it has to stop the charge.

Microsoft (October 2025). When Microsoft added Copilot to Microsoft 365 Personal and Family plans, the annual Personal price rose from A$109 to A$159. The ACCC alleges Microsoft told about 2.7 million Australian subscribers they could accept the higher price or cancel, without clearly mentioning a cheaper "Classic" plan. Lesson: when you raise prices, tell people every option.

Amazon Prime Video (June 2026). The ACCC alleges Amazon relied on unfair contract terms to add ads to Prime Video in July 2024, then charged A$2.99 a month to remove them, including for annual members who had already paid A$79 upfront. Lesson: a clause letting you change the deal mid-contract can itself be the problem.

All three were allegations before the court when I checked in October 2026. But the direction is clear, and the ACCC has named subscription traps and dark patterns as a 2026–27 enforcement priority. More in what the ACCC expects from subscription businesses.

The three flows you need to get right

Almost every subscription complaint I've seen comes back to one of three moments. Get these right and you're most of the way to compliance and to lower churn.

1. Sign-up

Say it's a subscription. Show the full price, how often it's charged, when it renews, and how to cancel, right next to the button. Don't ask for card details just to let people browse. Don't pre-tick add-ons.

2. Renewal and price changes

Remind people before a free trial ends and before an annual plan renews. When you raise prices, give clear notice before the new price applies and offer every option you have, including any cheaper plan. My guides to automatic renewals and raising subscription prices in Australia cover timing and wording.

3. Cancellation

If customers can join online, let them leave online. A save offer is fine. A maze is not. The cancellation rules guide shows what a compliant flow looks like.

You can test your own flow in a few minutes.

How does GST work on subscriptions?

If your GST turnover is A$75,000 or more (A$150,000 for a non-profit), you must register for GST and charge 10% on taxable sales. You have 21 days to register once you reach the threshold, according to the ATO's GST registration guidance.

For subscription businesses, two things trip people up.

First, GST is one-eleventh of a GST-inclusive price, not 10% of it. If your plan is A$49 a month including GST, the GST is A$4.45 and you keep A$44.55.

Second, GST follows the invoice, not the revenue. If a customer pays A$490 upfront for an annual plan, the A$44.55 GST is generally reported in that period's BAS (on the usual invoice or cash basis), even though you'll deliver the service over the next 12 months. That's cash you're holding for the ATO, not yours to spend.

Overseas businesses selling digital products and services to Australian consumers may also need to register for and charge GST. And not every subscription is taxable: some food and health supplies can be GST-free.

The details, including software, digital products and mixed supplies, are in GST on subscriptions and SaaS.

How do you price a subscription in Australia so it's actually profitable?

Here's a worked example for a business selling a monthly service plan to consumers.

Now change one number. If your delivery cost is really A$28 because heavy users come in twice as often as you planned, your contribution drops to A$15.57, a fall of nearly 40%.

That's why I tell every owner to model the heavy user, not the average one. Gyms learned this the hard way. In the book I quote the old industry pattern: about 80% of people who join a gym cancel within six months, and gyms rely on members who pay but rarely come. That kind of "breakage" model is exactly what regulators now look at closely. Build a plan that's profitable even when customers use what they pay for.

What do subscriptions do to cash flow and your accounts?

Recurring revenue is the cure for feast and famine. But it brings its own cash flow traps.

Monthly plans smooth your income, but they start small. If you switch existing clients from one-off jobs to a monthly fee, your cash can dip for a few months while the subscriber base builds. Plan for that gap.

Annual plans do the opposite. You get a big lump of cash upfront, but under AASB 15 you generally recognize the revenue as you deliver the service. An A$490 annual plan is about A$37.12 of ex-GST revenue a month, not A$445 in the month you're paid. The rest sits on your balance sheet as a liability (often called deferred or unearned revenue) until you earn it.

Why does that matter? Because if you spend annual prepayments as if they were profit, and a lot of customers then ask for refunds or you have a bad renewal season, you can run short of cash.

In the book I describe annual billing as creating "more certainty" but also a big "renewal event" every 12 months. One of the best salespeople I worked with called it "poking the bear." Both sides of that are true for your cash flow.

The accountant's view of all this, including how to forecast it, is in subscriptions and cash flow.

How do subscriptions change what your business is worth?

When someone looks at buying a real estate agency, what do they check first?

The rent book.

Sales commissions are great, but they're one-off. The rent roll is recurring, and it's the strongest sign the business will still be earning next year. That's the whole case for subscriptions in one example.

In The Subscription Playbook I note that most one-off transaction businesses attract offers of two to seven times net profit, if they attract offers at all. Subscription businesses with low churn and a strong moat can be valued on revenue instead.

Buyers will dig into your churn, your net revenue retention, your customer concentration and how much of the business depends on you personally. They'll also check that your sign-up and cancellation flows won't land them in an ACCC case. From July 2027, compliance is part of due diligence.

If you're thinking about an exit, read selling a subscription business in Australia and run your numbers through the estimator.

What about R&D, structure and the other tax questions?

A few more Australian-specific questions come up again and again:

• Software companies may be able to claim the R&D Tax Incentive for eligible experimental development work. Eligibility depends on the activity, not on being "a tech company."
• Structure (sole trader, company, trust) affects tax, asset protection and how you can sell later. It's much cheaper to get it right before you have recurring revenue than after.
• Selling the business can trigger capital gains tax, and small business CGT concessions may apply if you meet the conditions.

These are exactly the questions where general information runs out and you need an adviser who can see your numbers.

When is a subscription the wrong choice?

I love subscriptions. But they're not always right, and in Australia from 2027 a bad subscription is also a legal risk.

Don't add a subscription if:

• Customers only need you occasionally. A plan they forget about is the definition of a subscription trap.
• Your margins only work if people don't use it. If your profit depends on breakage, the ACCC's focus on manipulation and detriment should worry you.
• You can't deliver consistently. A subscription is a promise every month. If your capacity swings wildly, fix that first.
• You'd have to lock people in to make it work. Long minimum terms with big exit fees invite unfair contract term problems and angry customers.

Remember the Columbia Record Club. It grew to a huge business on "free" records, then made its subscriptions less transparent than they should have been. It angered customers, and when the market changed it had no loyalty left. I tell that story in the subscription trap laws guide, because it's the best warning I know.

Your 2027-ready checklist

Use this to check where you stand. Each item is general guidance, not a legal test.

1. Your sign-up page says it's a subscription and shows price, billing frequency, contract period, renewal terms, notice needed to cancel and how to cancel, next to the button.
2. Prices shown to consumers include GST and any fixed fees.
3. No pre-ticked add-ons, and no card details needed just to browse.
4. Free trials and discounted intro periods have a reminder before they convert, stating the price that will apply.
5. Annual plans get a reminder before renewal.
6. Price rises come with clear notice and every available option, including staying on a cheaper plan if one exists.
7. Customers who joined online can cancel online, in a few clicks, with at most one save offer.
8. Your terms don't let you change the deal on your own without giving customers a fair way out.
9. Your GST is calculated on the right basis, and annual prepayments are tracked as unearned revenue.
10. You've modeled what happens to profit if customers use the plan as much as they're entitled to.

For the full version with columns for owners and sign-off, download the AU subscription compliance checklist.

What to do next

Here's the order I'd tackle it in.

This month: Screenshot your sign-up, renewal and cancellation flows. Read them as if you were a tired customer at 11 pm. Fix anything that would make you feel tricked.

Before Christmas: Run your pricing through the calculator with real costs. Check your GST setup and how you're treating annual prepayments.

By March 2027: Update your terms, reminder emails and cancellation flow. Watch for the regulations on notice timing and adjust when they land.

1 July 2027: Be ready, and keep records showing how your flows work.

And ask yourself the question that matters most: if every customer understood exactly what they signed up for, would they still stay?

If the answer is yes, you've got a subscription business worth building.

Free Subscription Profit Review

Australian business owners can book a free 30-minute review with a BPAG Accountants adviser. An honest conversation about:

• whether a subscription model could work for your business
• how recurring revenue could cover your fixed costs each month
• how it could lift what your business is worth

Book my free review Call 1300 272 422

No cost, no obligation. General information only until we understand your situation.

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General information only, current as at October 2026. It isn't legal, tax or financial advice and doesn't consider your circumstances. Speak to a qualified adviser before acting.

Robert Coorey, MBA

Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.