GST on Subscriptions and SaaS: What Australian Businesses Need to Know

Every month, a box of my favorite peppermint tea turns up at my door.

I wrote about it in The Subscription Playbook as the perfect consumable subscription. I need it, I run out of it, and I save 10% by subscribing. (I also never have to remember to buy it, which is half the appeal.)

But if you sold that tea in Australia, you'd have a question I never had to think about as a customer.

Is there GST on it?

The honest answer is "it depends." Some food is GST-free in Australia. A box with tea and a branded mug could be partly GST-free and partly taxable. A software subscription is almost always taxable. A subscription sold to a client in Singapore may be GST-free. And an annual plan paid upfront changes when you owe the GST, even though you deliver the service over 12 months.

None of this is hard once you see it laid out. So let's lay it out.

Everything here is stated as at October 2026. It's general information, not tax advice. GST turns on the facts of your supply, so where your situation isn't simple, have a registered tax agent look at it.

Is there GST on subscriptions?

Generally, yes.

If your business is registered for GST, the subscriptions you sell in Australia are taxable sales unless they fall into a GST-free or input-taxed category. You charge 10% GST, report it on your business activity statement (BAS), and pay it to the ATO.

That covers almost every subscription model in the book: memberships, software, streaming, maintenance plans, retainers, bundled services and most subscription boxes.

The exceptions are where the money is lost. We'll get to them.

When do you have to register for GST?

The ATO's rule is simple. You must register if your GST turnover is A$75,000 or more, or A$150,000 or more for a non-profit. You then have 21 days to register.

GST turnover is measured two ways, and either one can trigger registration:

• Current: this month plus the previous 11 months.
• Projected: this month plus the next 11 months.

That projected test catches subscription businesses all the time. Say you launch a A$59-a-month membership in March and sign up 120 members by June. That's A$7,080 a month, or about A$85,000 over the next 12 months if they stay. You've probably crossed the threshold on a projected basis, even though your actual sales so far are well under A$75,000.

The ATO suggests checking every month. For a subscription business, that's a two-minute job: multiply your MRR by 12 and compare.

How much GST is in a subscription price?

GST is one-eleventh of a GST-inclusive price, not 10% of it.

This is the most common error I see in subscription pricing models. If your plan is A$49 including GST, the GST isn't A$4.90. It's A$4.45. You keep A$44.55.

When you sell to consumers, show the GST-inclusive price. The Australian Consumer Law's single-price rule generally requires the total price, including GST, to be displayed prominently. Business-to-business price lists often quote ex-GST, but say so clearly.

Then build your margin on the ex-GST number, after payment fees and the cost of delivery. The subscription price calculator does that sum for you, and my guide on how to price a subscription covers the rest of the method.

When do you report GST on monthly and annual plans?

This one catches people out because it doesn't match how revenue works.

The ATO lets businesses with aggregated turnover under A$10 million choose between two GST accounting methods:

• Cash basis: you report GST in the BAS period you receive payment.
• Non-cash (accruals) basis: you report GST in the period you issue the tax invoice or receive any payment, whichever comes first.

Most larger businesses must use the non-cash basis.

For a monthly plan billed and paid each month, both methods give you roughly the same answer.

For an annual plan, they can give you a very big lump. Here's an example.

That mismatch is normal and correct. But it means you're holding GST for the ATO in cash that feels like yours. Spend it, have a slow renewal season, and you can be short when the BAS falls due.

My rule: move one-eleventh of every receipt into a separate GST account the day it lands. More on this in subscriptions and cash flow, and on the revenue side in revenue recognition for subscriptions.

Are any subscriptions GST-free?

Yes. The ATO lists a number of GST-free categories. The ones that matter most for subscriptions are:

• Most basic food. A box of unprepared food items can be GST-free, while prepared meals, snacks and treats often aren't.
• Some health and medical services. Certain health services can be GST-free when the conditions are met.
• Some education courses and course materials.
• Exports, including services supplied to a recipient outside Australia, under specific rules.
• Sale of a business as a going concern, which matters when you sell your subscription business (see selling a subscription business in Australia).

Each category has conditions. "We're a health business" doesn't make your membership GST-free on its own.

Subscription boxes with mixed items

A box can contain GST-free and taxable items. If it does, you generally have a mixed supply and need to apportion the price between the parts, rather than picking one treatment for the whole box.

A gift box that's mostly packaging and presentation, with a little food in it, can raise harder questions. This is exactly where I'd pay for a ruling or written advice before launch, not after the first BAS.

Selling to customers overseas

The ATO's guidance says the supply of a service is usually GST-free if the recipient is outside Australia, subject to specific rules set out in GSTR 2019/1.

For a SaaS business with global customers, that can be a big deal. A US customer paying US$200 a month may be GST-free, while your Australian customer on the same plan is taxable. Your billing system needs to know where each customer is, and you need evidence for it.

How does GST work on overseas software and streaming subscriptions?

Since 1 July 2017, overseas businesses that sell digital products and services to Australian consumers have had to account for GST. The ATO's examples include e-books, movies, TV shows, music, online newspaper subscriptions, games, apps, software and software maintenance. People called it the "Netflix tax."

So when an Australian consumer subscribes to an overseas streaming service or an AI chat app, the price generally includes GST.

Business customers are treated differently. Under the ATO's ruling GSTR 2017/1, a supplier can treat a customer as a business rather than a consumer if the customer gives its ABN and confirms it's registered for GST. In that case the supplier generally doesn't charge Australian GST. If you don't use the service wholly for your business, the reverse-charge rules may require you to account for the GST yourself.

What that means for you:

1. If you buy SaaS for your business, enter your ABN in the supplier's billing settings. Many tools have a field for it.
2. If an overseas supplier charged you GST anyway, you can generally claim it as a credit if you hold a valid tax invoice. Check that the invoice shows GST.
3. If you're an overseas company selling into Australia, work out whether your customers are consumers or businesses, and whether you need to register. The Australian subscription guide covers the consumer-law side.

What has to be on a subscription tax invoice?

If a customer asks for a tax invoice, the ATO says you must give one within 28 days, unless the sale is A$82.50 or less including GST.

A tax invoice under A$1,000 needs:

1. A statement that it's a tax invoice.
2. Your identity and ABN.
3. The date it was issued.
4. A description of what was sold, with quantities and prices.
5. The GST amount, or a statement that the total price includes GST (if GST is exactly one-eleventh of the total).

For sales of A$1,000 or more, it also needs the buyer's identity or ABN. That matters for annual B2B plans, which often cross the line.

Most billing platforms can produce compliant tax invoices automatically. Check yours once, carefully, with a real invoice in front of you.

Free trials, discounts, refunds and failed payments

Four everyday subscription events, four quick rules of thumb:

• Free trials: no payment, no GST. When the trial converts, GST applies to the price you actually charge.
• Intro discounts: GST is calculated on the discounted price charged, not your full list price.
• Refunds and credits: a refund usually creates an adjustment that reduces the GST you owe in the period you make it. Make sure your billing system records refunds as refunds, not as a new negative sale with no GST.
• Failed payments: on a cash basis, no payment means no GST yet. On an accruals basis, if you've already issued the invoice, you may have reported GST you haven't collected. Bad debts can be adjusted later under the ATO's rules.

Failed payments are a cash flow problem as much as a tax problem. Read involuntary churn and failed payments for how to recover them.

When is GST the wrong thing to optimize?

I've seen owners build an entire offer around making it GST-free. That's backwards.

Price on value, choose the right model, and then get the GST treatment right. If a GST-free treatment applies, great. But redesigning a product purely to chase it often produces a box customers don't want, or an apportionment headache that costs more in advice than it saves.

The bigger risks are the boring ones: dividing by 10 instead of 11, forgetting the projected turnover test, and spending annual prepayments before the BAS is due.

Your GST checklist for subscriptions

1. Check your current and projected GST turnover every month.
2. Set your billing platform's default tax settings correctly before launch.
3. Show GST-inclusive prices to consumers.
4. Price and report margins on ex-GST revenue.
5. Choose cash or accruals deliberately, and know when an annual plan's GST falls due.
6. Identify customers outside Australia and keep evidence of where they are.
7. Apportion mixed subscription boxes, and get advice on borderline items.
8. Enter your ABN with overseas software suppliers.
9. Record refunds and credits as GST adjustments.
10. Move one-eleventh of every receipt into a separate account.

What to do next

Start with your three most common transactions: a monthly payment, an annual payment and a refund. Trace each one from your billing system into your accounting software and onto a BAS. If any step surprises you, that's where to look first.

Then run your pricing through the subscription price calculator with the GST taken out properly, and check whether your annual discount still makes sense with the annual discount calculator.

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

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Frequently asked questions

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.