How to invoice international customers for services?

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jimbob79

656 posts

Ultimate Geek

#224261 9-Nov-2017 17:43

So I'm thinking about working from home (NZ) and contracting my services as a developer to clients in Australia. What do I need to do invoice AU customers? What is the recommended process? Do I need to get an accountant?

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#1898457 9-Nov-2017 17:47

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I would suggest using an accountant, as it is far less hassle, and may save you money in the long run.

richms

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#1898497 9-Nov-2017 19:43

From a friends experiance, if you have lots of export customers so dont charge much GST on your invoices (or none at all) and have regular GST refunds on your purchases for business then expect frequent and in-depth audits. So get an accountant before you start so it is all in order.

Richard rich.ms

surfisup1000

4556 posts

Uber Geek

#1898559 9-Nov-2017 22:25

richms:

From a friends experiance, if you have lots of export customers so dont charge much GST on your invoices (or none at all) and have regular GST refunds on your purchases for business then expect frequent and in-depth audits. So get an accountant before you start so it is all in order.

I am in the same situation, have never billed foreign clients for GST so my returns have always been a refund.

In 13 years, I've not been audited once.

By frequent, what do you mean?

sen8or

915 posts

Ultimate Geek

#1898621 10-Nov-2017 08:41

I thought that you could only claim the % of GST credits that your business was liable for GST outputs (so if 95% of your business is not subject to GST, then you can only claim 5% of your GST back). Rules could have changed (or I could be wrong) but when I worked in finance years ago, because a good portion of our income was GST exempt (interest income) we had to manually recalculate GST on our expenses. Perhaps its different for financial services as opposed to exporters?

pom532

84 posts

Master Geek

#1898625 10-Nov-2017 08:46

sen8or:

I thought that you could only claim the % of GST credits that your business was liable for GST outputs (so if 95% of your business is not subject to GST, then you can only claim 5% of your GST back). Rules could have changed (or I could be wrong) but when I worked in finance years ago, because a good portion of our income was GST exempt (interest income) we had to manually recalculate GST on our expenses. Perhaps its different for financial services as opposed to exporters?

You get to claim back GST on all expenses that incur GST. In their cases, they weren't charging GST on revenue (or GST from revenue was less than GST on expenses) and so they got a refund.

timmmay

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#1898626 10-Nov-2017 08:51

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You don't get GST refunds if you don't charge international customers GST. Not entirely sure where they come from really, but I got one this year. That's the accountants problem.

I've done bits and pieces of international work for years, low cost / volume, never had a problem. I do have an accountant though, but all they do is my tax returns.

I'd just bill your customer, without GST, and they'd pay you. International transfer charges can get annoying, and . I use Paypal and Currency Online to transfer money around. If you can get them to do the transfer to NZ, great.

wsnz

626 posts

Ultimate Geek

#1898814 10-Nov-2017 11:32

timmmay:

You don't get GST refunds if you don't charge international customers GST. Not entirely sure where they come from really, but I got one this year. That's the accountants problem.

I've done bits and pieces of international work for years, low cost / volume, never had a problem. I do have an accountant though, but all they do is my tax returns.

I'd just bill your customer, without GST, and they'd pay you. International transfer charges can get annoying, and . I use Paypal and Currency Online to transfer money around. If you can get them to do the transfer to NZ, great.

Completely, agree with the above post.

Just to add one thing: If your expected number of customers is small and/or the dollar value of transactions are expected to be relatively small, then just invoice with GST and use direct credit/paypal/etc. as per above. If it grows, then you should speak to an accountant to review the GST regulations and perhaps set up easier payment methods.

Obviously since you're not charging GST on invoice to the customer you can't claim that, however for income tax purposes you can claim business costs (e.g. consumables etc.)

I provide services for customers in Australia, the UK and Canada regularly. A couple of my customers have started using Transferwise.com to pay direct to my back a/c.

Amosnz

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#1898891 10-Nov-2017 12:42

I contract (full time) to a single client in Australia. I am not even registered for GST as you have to earn 60k per year from within NZ to make registration compulsory.

This obviously means I cant claim GST on expenses either, but they are minimal for me.

Edit: For payment I've setup a foreign currency account with my bank (ASB), I invoice the client in AUD, receive AUD into the foreign currency account, and transfer to NZD account as required.

Speedtest

surfisup1000

4556 posts

Uber Geek

#1898900 10-Nov-2017 13:07

2 people support this post

timmmay:

You don't get GST refunds if you don't charge international customers GST.

This differs from the advice I was given from the IRD.

eg, in their GST guide...

Zero-rated supplies
Some goods and services aren't exempt supplies, but GST is
charged at 0%. For example:
• exported goods

If you have zero-rated supplies you can claim GST on your
expenses.

You do charge GST, just at a 0% rate (as opposed to being exempt).

jonb

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#1898907 10-Nov-2017 13:18

Question - would it be advantageous to spend a bit of time in Australia to get a bank account there to allow easier payments / or even an Australian tax number?

itxtme

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#1898965 10-Nov-2017 15:16

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You don't get GST refunds if you don't charge international customers GST

This is true, but equally you will not have paid the IRD the GST.

As a business based in NZ you will purchase goods and services to complete your job. If these are in NZ you will be charged GST by that business, and this is what makes up a refund. At the end of your GST period your GST required to pay is the the GST you have charged NZ based customers (incl. businesses) - the GST on your expenses (ie. GST you have payed to other businesses). So if you spend money in NZ but dont make any money from locals, then you will always get a refund.

surfisup1000

4556 posts

Uber Geek

#1898966 10-Nov-2017 15:18

jonb:

Question - would it be advantageous to spend a bit of time in Australia to get a bank account there to allow easier payments / or even an Australian tax number?

Just have your money transferred to an AUD fx account in NZ.

No need to spend more time in Aus than necessary :)

jarledb

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#1898968 10-Nov-2017 15:21

surfisup1000:

timmmay:

You don't get GST refunds if you don't charge international customers GST.

This differs from the advice I was given from the IRD.

eg, in their GST guide...

**

Zero-rated supplies
Some goods and services aren't exempt supplies, but GST is
charged at 0%. For example:
• exported goods

If you have zero-rated supplies you can claim GST on your
expenses.

**

You do charge GST, just at a 0% rate (as opposed to being exempt).

This is exactly what I have been advised by my accountant. 99.9% of my revenue is invoiced to companies outside of NZ, but I am registered in NZ and hardly invoice anything in NZ so get GST refunds for expenses incurred in NZ.

timmmay

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#1898969 10-Nov-2017 15:22

surfisup1000:

timmmay:

You don't get GST refunds if you don't charge international customers GST.

This differs from the advice I was given from the IRD.

If you don't charge GST why would you get a refund? I think GST refunds come from buying products for business use, GST is refunded on those.

dclegg

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#1898971 10-Nov-2017 15:26

richms:

From a friends experiance, if you have lots of export customers so dont charge much GST on your invoices (or none at all) and have regular GST refunds on your purchases for business then expect frequent and in-depth audits. So get an accountant before you start so it is all in order.

Interesting. I've been doing zero rated work since 2006, and pretty much always get a refund on my six monthly GST return. I've never been audited (touch wood).

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