The U.S. Sales Tax Guide for Australia-Based Businesses

Does Australia Have a Sales Tax?

No. Australia has a Goods and Services Tax (GST), a broad-based 10% value-added tax (VAT), not a US-style retail sales tax, per the ATO. A business must register once GST turnover reaches AUD $75,000, or AUD $150,000 for non-profit organisations, per the ATO. Registered businesses lodge a BAS and claim input tax credits on their purchases.

How Is US Sales Tax Different From Australia’s GST?

GST is a flat 10% federal VAT with input credits, administered by one authority. US sales tax is a state and local single-stage retail tax, with no federal version, no input credits, and a separate registration in every state where you have nexus. The table below sets the two systems side by side.

GST charges tax at every stage and refunds the credits, per the ATO. US sales tax applies once, at the final sale, with no credit mechanism. That difference drives almost every compliance surprise below.

Which US States Have No Sales Tax?

Five states levy no statewide sales tax: New Hampshire, Oregon, Montana, Alaska, and Delaware, known by the mnemonic NOMAD. Alaska is the trap. It has no state tax, but more than 100 municipalities charge local sales tax, coordinated through the Alaska Remote Seller Sales Tax Commission (ARSSTC). Oregon, Montana, Delaware, and New Hampshire are tax-free at every level.

Do Australian Businesses Pay US Sales Tax?

Yes. An Australian business pays US sales tax in any state where it has nexus, and being foreign confers no exemption. The US-Australia income tax treaty covers federal income tax only. Sales tax is sub-federal and sits outside the treaty’s scope. The duty applies equally to your own website, your Shopify store, and your Amazon listings. The two sections below explain how nexus forms.

What Creates Physical Nexus in the US?

Physical presence in a state creates nexus: offices, employees, agents, contractors, inventory, and trade-show presence. One employee or one warehouse lease triggers it regardless of sales volume. Inventory in a third-party fulfillment center counts too, so Fulfillment by Amazon (FBA) inventory creates physical nexus in every state where Amazon stores it.

How Do You Find Which States Hold Your FBA Inventory?

Pull the FBA Inventory Event Detail report in Amazon Seller Central. It lists the states holding your stock, which map directly to your physical-nexus states. Amazon moves inventory between warehouses on its own schedule, so re-run this report regularly. Each new storage state is a fresh physical-nexus state, no matter how little you sell there.

What Is the Economic Nexus Threshold in Each US State?

Economic nexus means a sales or transaction threshold alone triggers collection, with no physical presence needed. It exists because South Dakota v. Wayfair, Inc., decided June 21, 2018, overruled Quill Corp. v. North Dakota (1992) and its physical-presence rule. The old “$100,000 or 200 transactions” shorthand is not universal.

Several more states, including Colorado, Iowa, North Dakota, Washington, and Wisconsin, have dropped the 200-transaction test since Wayfair. States also differ on whether they measure gross, retail, or taxable sales. For the current rule in all 50 states, use the Commenda US nexus exposure guide, kept up to date.

Do Marketplaces Like Amazon Collect US Sales Tax for You?

Yes. In nearly every state with a sales tax, marketplace facilitator laws require Amazon, eBay, Etsy, and Walmart to collect and remit on marketplace orders. California made facilitator collection operative on 1 October 2019, per the California Department of Tax and Fee Administration (CDTFA). That still does not end every obligation.

When Do Your Obligations Remain After the Marketplace Collects?

Some states still require marketplace-only sellers to hold a permit or file returns even when the marketplace remits the tax. Your marketplace sales can also count toward the economic nexus threshold governing your direct Shopify and website sales. Your FBA inventory still creates physical nexus in its storage state. Shopify does not auto-remit for you in most cases, so you remain responsible on direct-channel orders.

How Does an Australian Business Get an EIN for US Sales Tax?

File Internal Revenue Service (IRS) Form SS-4. Foreign applicants without a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) cannot use the online tool. They apply by phone at +1-267-941-1099, or by fax or mail, per the IRS guidance for international applicants.

The Employer Identification Number (EIN) is usually the first bottleneck. Many states ask for an EIN before issuing a sales tax permit, so secure it early. The phone and fax routes for foreign applicants take longer than the domestic online tool, so build in lead time before you plan to register.

How Do You Register for a Sales Tax Permit in Multiple US States?

Register with each nexus state’s tax authority individually. Most offer online registration and assign a filing frequency with the permit. Do not collect tax before you hold a valid permit, since collecting without one is itself a violation in most states.

1. Confirm your nexus states from your physical footprint and threshold analysis.
2. Gather your Australian business details, EIN, product descriptions, and estimated volumes.
3. Apply through each state’s tax authority portal.
4. Receive your permit and assigned filing frequency.
5. Configure collection in Shopify or Amazon for each registered state.

Member states of the Streamlined Sales Tax (SST) program offer a single online registration covering all SST member states at once, which can cut the per-state paperwork for sellers with broad exposure.

How Do You Collect and Remit US Sales Tax From Australia?

Charge the rate for the buyer’s delivery address at checkout, then remit to each state on its schedule. As a remote seller, your sales are almost always destination-sourced, so the customer’s address sets the rate. Combined state and local rates exceed 10% in some jurisdictions, so look up the exact rate with the Commenda sales tax calculator rather than assuming a flat figure.

Is US Sales Tax Based on the Buyer’s or Seller’s Location?

For remote sellers, the buyer’s location sets the rate in nearly every state.

Why Does Product Taxability Vary by State?

Each state defines its own taxable base, so the same product can be exempt in one state and taxed in another. Clothing and groceries are the classic examples. Pennsylvania and Minnesota exempt most clothing, per their Departments of Revenue (DORs), while most states exempt unprepared groceries. Document a taxability decision for every product in every nexus state, and revisit it when a state changes its law.

How Do Resale and MTC Exemption Certificates Work?

The US has no input-credit mechanism like GST. Instead, a business buyer gives you a completed state resale certificate, or the Multistate Tax Commission (MTC) Uniform Sales and Use Tax Certificate where accepted, and you skip charging tax on that sale.

Use the state’s own form where the state does not accept the MTC multistate certificate, and the MTC form where it does. Keep every certificate on file for the full audit lookback period. Some states, including Florida, require annual renewal. Missing or expired certificates turn an exempt sale into an assessed liability in an audit.

Is SaaS Taxable in the US for Australian Software Companies?

It varies by state, there is no federal rule, and the list changes often. Some states tax Software as a Service (SaaS), others exempt it, and treatment shifts as states update their digital-product laws. Confirm each nexus state before you decide whether to charge.

How Do You File US Sales Tax Returns From Australia?

File electronically through each state’s portal on your assigned frequency: monthly, quarterly, or annually, set by your sales volume. File a zero return even when you collected nothing, because most states require it once you hold an active permit.

What Are Common Mistakes When Filing?

The usual errors are predictable: skipping states where you have nexus, missing zero returns, miscalculating combined local rates, and failing to retain exemption certificates. Each one compounds into back tax, penalties, and interest in an audit. The remediation section below covers lookback windows if you find unregistered exposure.

How Do You Calculate Your US Sales Tax Nexus Exposure?

A nexus study compares your actual sales, transaction counts, and inventory footprint against every state’s threshold and measurement period to produce a defensible registration list. It replaces guessing with evidence. Treat it as a repeatable process, because your footprint and the thresholds both move.

Export sales by state and transaction counts per channel across Shopify and Amazon. Pull your FBA inventory location reports. Compare each state against its threshold and measurement period. Then record the date each threshold was crossed, your inventory location history, and a written registration decision for every state.

What If You Discover Historical Unregistered US Sales Tax Exposure?

Two remediation paths exist. A Voluntary Disclosure Agreement (VDA) typically limits the lookback to three to four years and usually waives penalties. Historical registration, where you register with a back-date, file back returns, and request penalty abatement, suits smaller liabilities, while VDAs fit larger exposure.

The enforcement gap matters. Most states apply a six-to-eight-year lookback to unregistered sellers they find on their own. A state can also treat undisclosed nexus as fraudulent misrepresentation, with no statute of limitations. Self-correcting through a VDA caps the window before a state does it for you on worse terms.

What Software Helps Australian Ecommerce Businesses With US Sales Tax?

The category spans three tiers. Checkout-level calculation, like Shopify Tax, computes the correct rate on Shopify orders but does not register you or file returns. Point solutions, such as Avalara and TaxJar, automate rate calculation and returns but still leave you to decide where you owe. Full-service platforms, like Commenda, track nexus, register you, and file on your behalf.

Match the tier to your footprint. A US-only seller with a single sales channel may be served well by a point solution. A multi-channel Australian seller shipping across many states, holding FBA inventory, and reporting GST at home gets more from a platform that handles the whole cycle in one place.

How We Help Australian Businesses With US Sales Tax

Commenda’s global indirect tax software gives Australian sellers certainty over their US obligations. It tracks physical and economic nexus across every state, calculates combined state and local rates, and handles registrations and filings for businesses with no US finance staff. You run US sales tax and your Australian GST reporting from one system.

Use the US nexus exposure guide to check the current threshold in each state, and the sales tax calculator for instant rate lookups by address. The calculator looks up rates; the guide covers exposure. Commenda supports 100+ ERP, API, and custom integrations, including the Shopify and Amazon ecosystem this post covers.

Book a demo to get a free nexus exposure assessment across your US sales channels, so you know exactly where you must register before a state finds you first.