GST out-of-scope vs GST-free vs input-taxed

Where it goes wrong

Most cross-border freelance work performed in Australia for an overseas client is a GST-free export of services under s 38-190 — not "out of scope". You don't charge GST, but the income still counts when you tot up your $75,000 threshold.

Worked example

Daniel — Perth, WA — freelance brand designer (FY 2025-26)

Australian-client work: $50,000. US-client work: $40,000 (delivered from Perth, paid in USD via Wise).

Daniel assumes the US work is "out-of-scope" → he's under $75,000 → no GST registration. Wrong.

The US-client work is a GST-free export of services under s 38-190 (recipient is not in Australia when the service is performed). GST-free still counts toward GST turnover. Total turnover: $90,000. Registration is mandatory from the month his projected turnover crosses $75,000.

Net outcome once registered: charges 10% GST on Australian invoices, 0% on US invoices, claims input tax credits on his Australian business expenses. Failing to register exposes him to back-dated GST liability (he must pay 1/11th of his Australian invoices to the ATO out of pocket).

The reverse mistake — input-taxed

A landlord with $80,000 of residential rent doesn't have to register: residential rent is input-taxed, and input-taxed supplies don't count toward the $75,000 threshold. But mixed portfolios (some commercial rent, some residential) need a careful split — the commercial rent is taxable and counts.

Cross-references

Test your registration position in the GST Registration Threshold Calculator and use the GST Calculator for BAS prep once registered.

GST and ‘Out-of-Scope’ Supplies — A Common Registration Trap

Where it goes wrong

The reverse mistake — input-taxed

Cross-references