Why Google Ads and Canva don’t charge GST and what the ATO expects from you

Why Google Ads and Canva don’t charge GST and what the ATO expects from you

If you’re a small business owner in Australia, chances are you pay for digital tools every month for Google Ads, Facebook Ads, Canva, Grammarly, Slack, Dropbox, ChatGPT, or a hundred other cloud subscriptions. Most of these are billed from overseas. And here’s the bit you may miss as a small business owner.

Just because these companies don’t charge GST on your invoice doesn’t mean there’s no GST obligation

The ATO has a specific rule that might apply to you: the GST reverse charge. It’s not new, but it’s one of the most overlooked obligations for small businesses, even those with bookkeepers.

This article breaks it down clearly, using real examples, a simple flowchart and a practical checklist.

Why doesn’t Google Ads or Canva charge GST?

Many global digital companies operate from outside Australia or use an overseas billing entity. Even if they have an Australian presence, their invoicing might still route through

  • The US (e.g. many SaaS subscriptions)
  • Singapore (Google Ads)
  • Ireland (Meta/Facebook)
  • Other international hubs

GST is only charged on invoices when the supplier is:

  1. Making a taxable supply in Australia, and
  2. Registered (or required to be registered) for GST.

If the supplier is not carrying on an enterprise in Australia, the GST rules can flip, placing responsibility on you, the customer, instead. This is called the reverse charge.

What is the GST reverse charge?

Typically, the seller charges GST. But when you buy digital services from overseas and no GST is charged, the ATO may require you to calculate GST and include it in your BAS. You pay GST on the purchase price.

But the good news?
If you’re GST-registered and the purchase relates to your business, you typically get an input tax credit, so there’s no net cost unless you make input-taxed sales (e.g. financial services, residential rent).

This is why many businesses reverse-charge but end up with a net impact of $0.

Examples from small business clients

1. Google Ads billed from Singapore

Invoice has no GST → Reverse charge applies.
In BAS:

  • You add 10% GST on the amount.
  • You claim the same amount as a credit (if eligible).

2. Canva billed from the US

Invoice has no GST → Reverse charge applies.

3. OpenAI or ChatGPT Team billed from the US

No GST → Reverse charge applies.

4. Meta/Facebook Ads billed from Ireland

Often no GST → Reverse charge applies.

5. Xero or Adobe

Some charge GST, some don’t, depending on the entity and plan. If GST is already charged, → reverse charge does not apply. So, there are inconsistencies, and an Accountant can help you better understand the differences.

Why the ATO cares

Since 2017, the ATO has monitored:

  • foreign digital service providers
  • Australian business payments to overseas suppliers
  • mismatches in BAS reporting
  • unclaimed reverse-charge obligations

Audits have picked up businesses that:

  • claimed deductions for foreign ads
  • but never included the reverse-charge GST

Because these payments are now obvious (through banks, merchant accounts, and data matching), small businesses should be proactive.

Reverse-charge decision flowchart

Quick checklist for small business owners

Use this list before you send invoices to your bookkeeper or lodge your BAS.

1. Review your foreign digital spending

Tick what you use:

  • Google Ads
  • Meta/Facebook Ads
  • Canva
  • OpenAI / ChatGPT
  • Microsoft (some plans billed overseas)
  • HubSpot
  • Dropbox
  • Slack
  • Zoom
  • Shopify
  • Other US/EU/Singapore digital services

2. Check if GST was charged

If GST is not shown, → reverse charge likely applies.

3. Make sure your accountant or bookkeeper knows

Foreign invoices often get overlooked because they appear small ($15–$200/mth).
But they add up, and the ATO checks them.

4. If you make input-taxed supplies

Examples:

  • Residential property rental
  • Some financial products
    Then you may have a real GST liability.

5. Keep all foreign invoices

You’ll need them if the ATO ever asks.

What this means for your business

Reverse-charged GST is not a penalty or a new tax. It’s simply the ATO ensuring that overseas digital suppliers don’t get a competitive edge over Australian businesses.

For most small businesses, the effect is neutral, but the compliance obligation is real.

Failing to reverse-charge can create:

  • unexpected GST bills
  • interest charges
  • BAS amendments
  • ATO scrutiny
  • unnecessary stress

A brief annual or quarterly review of foreign digital suppliers can prevent all of that.