An Australian business runs on one mental model. One rate of 10%. One registration through an Australian Business Number (ABN). One Business Activity Statement (BAS). US sales tax breaks all of it. The United States (US) has no federal sales tax. States, counties, and cities each set their own rates, permits, and returns.
The stakes are higher than most Australian sellers expect. Since 2018, you can owe US sales tax in a state without setting foot in it. The ATO’s GST guidance governs your home obligations. It says nothing about the dozens of separate US regimes you may now touch. This US sales tax guide for Australian businesses maps what changes and what to do next.
How Is US Sales Tax Different From Australia’s GST?
Australia’s Goods and Services Tax (GST) is a flat 10% federal value-added tax (VAT) with input credits. US sales tax is a state and local single-stage retail tax, with no federal version and no input credits. Australia registers you once; the US registers you per state where you have nexus. The table below sets the two systems side by side.
| Feature | US sales tax | Australia GST | Source |
|---|---|---|---|
| Taxing authority | State and local governments; no federal tax | Federal, administered by the ATO | ATO; state DORs |
| Rate | Varies across thousands of jurisdictions; combined rates exceed 10% in some areas | Flat 10% | ATO; state DORs |
| Tax type | Single-stage retail tax, no input credits | Value-added tax with reclaimable GST credits | ATO |
| Collection point | Final retail sale to the consumer | Every supply-chain stage | ATO |
| Registration trigger | Nexus (physical or economic), per state | Turnover of AUD $75,000 ($150,000 for non-profits) | ATO / business.gov.au |
| Filing | Per-state returns, frequency set by the state | Single BAS | ATO |
| Commencement | Modern remote-seller rules since 2018 (Wayfair) | GST commenced 1 July 2000, Howard government | ATO; U.S. Supreme Court |
Five states levy no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. The mnemonic is NOMAD. Alaska is the catch. It has no state tax, but the Oregon Department of Revenue confirms Oregon has none at all, while over 100 Alaskan municipalities charge local sales tax, per the Alaska Remote Seller Sales Tax Commission (ARSSTC).
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 does not exempt you. The US-Australia income tax treaty does not shield you, because sales tax is a state tax outside the treaty’s scope. The duty applies to your own website, your Shopify store, and your Amazon listings. The two sections below explain the two ways nexus forms.
What Creates Physical Nexus in the US?
Physical presence in a state creates nexus: offices, employees, agents, contractors, and inventory. Inventory is the trap for online sellers. Stock held in a third-party fulfillment center counts, so Fulfillment by Amazon (FBA) inventory creates physical nexus in every state where Amazon warehouses 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 inventory, which maps directly to your physical-nexus states. A single employee, a warehouse lease, or an in-state contractor triggers the same result, regardless of your sales volume.
What Is the Economic Nexus Threshold in Each US State?
Economic nexus means a sales threshold alone triggers collection duties, with no physical presence. 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 shorthand of “$100,000 or 200 transactions” is not universal. Thresholds, transaction tests, and measurement periods vary by state.
| State | Economic nexus threshold | Measurement period | Source |
|---|---|---|---|
| South Dakota | $100,000 gross sales; 200-transaction test repealed 1 July 2023 | Current or prior calendar year | South Dakota DOR |
| California | $500,000 in sales; no transaction test | Preceding or current calendar year | California CDTFA |
| Texas | $500,000 in total Texas revenue; no transaction test | Trailing 12 months | Texas Comptroller |
| New York | $500,000 AND more than 100 transactions (both required) | Trailing four sales-tax quarters | NY Dept. of Taxation |
| Alaska (local) | $100,000 gross sales; 200-transaction test repealed 1 Jan 2025 | Current or prior calendar year | ARSSTC |
Many states still use a $100,000 OR 200-transaction pattern, but several have dropped the transaction count. States also differ on whether they measure gross, retail, or taxable sales. For the current threshold in every state, use the Commenda US nexus exposure guide, which is 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 CDTFA. This does not always end your obligations.
When Do Your Obligations Remain After the Marketplace Collects?
Registration and filing rules for marketplace-only sellers vary by state. Some still require a permit or a return even when the marketplace remits the tax. Your marketplace sales can also count toward the economic nexus threshold that governs your direct Shopify and website sales. Your FBA inventory still creates physical nexus in its storage state, no matter who collects the tax. The Commenda US nexus exposure guide gives the state-by-state answer.
How Does an Australian Business Get an EIN for US Sales Tax?
An Australian business without US presence gets an Employer Identification Number (EIN) by filing 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 EIN applicants.
The EIN is usually the first bottleneck for foreign registrants. Some states accept your Australian business details for sales tax registration, but many ask for an EIN first, so it is worth securing early.
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.
- Confirm your nexus states from your physical footprint and threshold analysis.
- Gather your Australian business details, EIN, product descriptions, and estimated volumes.
- Apply through each state’s tax authority portal.
- Receive your permit and assigned filing frequency.
- Configure collection in Shopify or Amazon for each registered state.
Member states of the Streamlined Sales Tax (SST) program offer a single online registration that covers all SST 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 location 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 delivery address sets the rate. Product taxability also varies, so clothing or groceries may be exempt in one state and taxed in another.
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.
| Sourcing rule | Who it applies to | Rate based on |
|---|---|---|
| Destination sourcing | Remote sellers, most states | Customer’s delivery address |
| Origin sourcing | In-state sellers, a minority of states | Seller’s in-state location |
| Texas single local rate | Remote sellers, optional election | One combined local rate |
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, so you skip charging tax. Keep every certificate on file for the audit lookback period.
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. Missing a period triggers penalties and interest.
What Are Common Mistakes When Filing?
The common mistakes are predictable. Sellers skip states where they have nexus, miss zero returns, miscalculate combined local rates, or fail to retain exemption certificates. States can audit returns 3 to 4 years back, and increasingly pursue foreign sellers, so keep clean records for the full lookback window.
Is SaaS Taxable in the US for Australian Software Companies?
Software as a Service (SaaS) taxability varies by state. Some tax it, some exempt it, and the list changes often. There is no federal rule and no single answer, so software companies must check each nexus state before deciding whether to charge.
| State | SaaS taxable? | Source |
|---|---|---|
| Texas | Taxable | Texas Comptroller |
| Pennsylvania | Taxable | Pennsylvania DOR |
| California | Exempt | California CDTFA |
| Florida | Exempt | Florida DOR |
Because these rules shift, document every taxability decision and revisit it when a state updates its digital-product law.
How Do You Know Where You Owe? Running a Nexus Study
A nexus study compares your actual sales and inventory footprint against every state’s rules to produce a defensible list of where you must register. It replaces guessing with evidence. Treat it as a repeatable process, not a one-time template, because your footprint and the thresholds both move.
How Do You Conduct a Nexus Study?
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 document the conclusions. Keep monthly revenue and transaction counts by state, the date each threshold was crossed, your inventory location history, and a written registration decision for every state.
How Commenda Helps 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 states, calculates state and local rates, and handles registrations and filings for businesses with no US finance staff. You get one system for both US sales tax and your Australian GST reporting.
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. 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 out first.
