GST on Overseas Subscriptions and Digital Services in Australia (2025 Update)

Many Australian business owners are unsure whether they can claim GST on overseas subscriptions or advertising services like Facebook and Google Ads. The confusion is understandable - the rules around cross-border digital services have evolved, and what applies to one platform may not apply to another.

This updated guide breaks down how GST applies to overseas digital subscriptions, advertising, and SaaS tools - and what steps you should take to stay compliant (and not miss out on legitimate input tax credits).

• Incorrect GST treatment can lead to either under-claiming (losing credits) or over-claiming (risking penalties).
• Digital services like SaaS, cloud storage, online ads, and tools are now standard in Australian businesses.
• The Australian Taxation Office (ATO) has rules to ensure GST is properly applied to imported digital services, often referred to as the "Netflix Tax".

For reference, see the ATO's official page on GST on imported services and digital products.

1. Imported Services and Digital Products

Overseas digital subscriptions, advertising platforms, and SaaS tools often fall under "imported services" in the GST law. This ensures that local and overseas suppliers are treated equally for GST purposes.

2. Reverse Charge (Self-Assessment)

If an overseas supplier doesn't charge GST, a GST-registered business may need to self-assess and pay GST under the reverse charge rules. You then may be able to claim that GST back as an input tax credit on your BAS.

3. Input Tax Credit (ITC)

If you've paid GST (either directly or via reverse charge) and the expense is used for your business, you can generally claim it as an input tax credit - effectively making the transaction GST-neutral.

4. B2B vs B2C

These rules mainly affect business-to-consumer (B2C) transactions. If you're a GST-registered business (B2B), overseas suppliers may not charge GST - leaving you to handle it via reverse charge.

5. "Use or Enjoyment" in Australia

Even if the service is provided by an overseas company, GST may still apply if the service is used or enjoyed in Australia.

Scenario A: Supplier Charges GST

If your overseas supplier is registered for GST in Australia and issues a valid tax invoice with GST included, you can claim that amount as an input tax credit (assuming it's for business use).

Examples (subject to change, always verify):

• Canva – Charges GST
• Dropbox – Charges GST
• Campaign Monitor – Charges GST
• Hubdoc – Does not charge GST
• Mailchimp – Does not charge GST
• Twilio - Does not charge GST

Check each supplier's invoice or ABN status for accuracy using ABN Lookup.

Scenario B: Supplier Does NOT Charge GST

If the supplier doesn't charge GST (e.g. they're not registered in Australia), you may need to apply the reverse charge rule. This means:

1. You self-assess 10% GST on the purchase value (in other words you calculate GST exclusive value).
2. You report that GST on your BAS as "GST on purchases".
3. You can then claim it back as an input tax credit in the same BAS period, provided the purchase was for business use.

This usually results in a net zero GST outcome - but ensures compliance.

Scenario C: You Are Not GST-Registered

If you are not registered for GST, you cannot claim GST credits. If the overseas supplier charges GST, it simply becomes part of your business expense.

Facebook (Meta) operates from Ireland for Australian advertisers, which often creates confusion around GST.

As of recent ATO and Meta guidance:

• If you do not provide an ABN in your ad account, Facebook charges 10% GST on your ad spend.
• If you do provide an ABN and are GST-registered, Facebook generally does not charge GST - you must instead apply the reverse charge and claim the input tax credit on your BAS.

See Facebook's help page on GST and advertising accounts for more details.

Therefore, yes - you can often claim GST on Facebook ads, but the method depends on how your account is set up and whether GST was included on the invoice.

With the rapid adoption of AI tools like ChatGPT, many Australian businesses are now subscribing to ChatGPT Plus or other OpenAI paid plans. The key question is whether GST applies - and if so, how it should be reported.

1. Is OpenAI Registered for GST in Australia?

As of 2025, OpenAI (the provider of ChatGPT) is not registered for GST in Australia. Their billing entity is located in the United States, and invoices are issued in USD through Stripe or directly via OpenAI’s billing portal.

This means OpenAI does not charge GST on ChatGPT Plus or API subscription invoices issued to Australian users.

2. How GST-Registered Businesses Should Treat It

If your business is registered for GST and you use ChatGPT for commercial purposes (e.g. marketing, coding, customer support, or admin automation), the subscription is generally considered a business expense used in Australia. In this case, the reverse charge rule applies.

Here’s how to handle it correctly:

1. Calculate 10% GST on the AUD-equivalent value of your ChatGPT subscription (based on the exchange rate on the date of payment).
2. Report that GST as “GST on purchases” (reverse charge) in your BAS.
3. Claim the same amount as an input tax credit in the same BAS period - if the subscription is fully for business use.

This typically results in a net-zero GST effect but ensures you comply with the ATO’s reverse-charge requirements for imported digital services.

For more detail, refer to the ATO guidance on GST on imported services and digital products.

3. If You Are Not GST-Registered

If you are not registered for GST (e.g. your turnover is below the $75,000 threshold), you do not need to apply the reverse charge and cannot claim any GST credit. The ChatGPT subscription simply becomes a normal business expense, with no GST impact.

4. Documentation to Keep

• Keep your ChatGPT subscription invoices or receipts (from OpenAI or Stripe).
• Record the payment amount and date in AUD.
• Include the expense in your accounting software under “Software Subscriptions” or similar.

5. Summary

In short: ChatGPT subscriptions are treated as imported digital services. GST-registered Australian businesses should apply the reverse charge rule, while non-registered users do not need to take any GST action.

• Confirm GST registration: You must be GST-registered to claim input tax credits.
• Check supplier invoices: Does GST appear? If not, assess whether reverse charge applies.
• Add your ABN: Always enter your ABN in platforms like Facebook or Google Ads to ensure correct tax treatment.
• Only claim for business use: Expenses must be for your taxable business activities.
• Keep valid invoices: For expenses over $82.50 (inc. GST), keep compliant tax invoices.
• Convert currencies correctly: Use ATO-approved exchange rates for foreign invoices.
• Review suppliers annually: Overseas companies often change their GST registration status.

• Claiming GST when not registered.
• Not applying the reverse charge when required.
• Claiming without valid tax invoices.
• Double claiming (both supplier-charged and reverse-charged).
• Ignoring supplier GST status changes.

Australian businesses can often claim GST on overseas digital subscriptions and advertising, but only when the right conditions are met. Check every supplier's GST status, add your ABN where required, and ensure you apply the reverse charge rule when necessary.

For full guidance, refer to the ATO's resources on GST on imported services and digital products.

This article is general information only and not tax advice. Always consult your accountant or tax professional regarding your specific situation.