GST and Cross-Border Supplies

For almost twenty years, GSTR 2005/6 and GSTR 2007/2 have guided us through the murky world of GST-free supplies to non-residents.
They’ve served us well — but business models have evolved faster than the rulings ever could.

This month, the ATO has finally retired those two old workhorses and replaced them with a single, cleaner ruling: GSTR 2025/1.
It’s less about rewriting the law and more about bringing it into the present — where cloud services, remote delivery and offshore group structures are the new normal.

So, what’s changed?

Not much in substance — but quite a bit in tone and focus.

The ATO has modernised its examples, stripped out duplication and aligned everything with the 2016 legislative amendments.
More importantly, it’s emphasising a point that many advisers gloss over: where the benefit of a service is actually enjoyed still drives the GST outcome.

If the work benefits an Australian entity — even when the invoice is addressed to an offshore parent — the supply isn’t GST-free.
That simple test continues to catch out plenty of well-intentioned advisers.

The “benefit location” trap

Take a familiar example.
A Melbourne advisory firm provides tax planning advice to a Singapore parent company, but the purpose is to restructure its Australian subsidiary.
The contract is offshore; the payment is offshore — yet the commercial benefit sits firmly in Australia.

Under GSTR 2025/1, that service is taxable.
Why? Because the economic use and enjoyment occurred here, not overseas.

Flip that around and imagine a non-resident acquiring software rights from an Australian developer for global use entirely outside Australia — that one stays GST-free.

Same law, different direction of benefit.

The ATO’s subtle message

While the new ruling reads as a tidy consolidation exercise, there’s a strategic undertone:
the Commissioner wants advisers to stop treating “offshore invoice = GST-free” as a safe default.

It’s no longer enough to rely on the residency of the contracting entity.
You need evidence — functional, contractual and commercial — that the use truly happens outside Australia.

This shift mirrors what we’re seeing across indirect-tax reviews: a move from formalism to substance-based analysis.

A few pointers from practice

Review cross-border service arrangements that have gone untouched for years.

Revisit long-standing GST-free treatments, especially for professional services, licensing and management-fee models.

Ensure engagement letters spell out who benefits from the work — not just who pays the bill.

Keep documentation that shows non-residents were genuinely outside Australia when the service was done.

These checks aren’t new — but GSTR 2025/1 makes them harder to ignore.

Final thoughts

The ATO hasn’t redrawn the GST map; it’s simply updated the legend.
What matters now is that practitioners read the clues the same way the Commissioner does.

As Peter Adams put it during September’s session:

“The GST law hasn’t moved — but the ATO’s expectations have. It’s no longer about where the invoice lands; it’s about where the value lands.”

If you’ve been treating cross-border supplies as GST-free by default, now’s the time for a sense-check before that assumption becomes an audit talking point.