Understanding import tax for Australia-based Print on Demand business?

[JHaigh12]

Hello all! 

Sorry this may be a long one... 

I am currently based in Australia and have a print on demand business with Printful. I received my first sale today (YAY) however now I have started to worry about import tax etc as the printing is being done in North America. I have GST included so I'm unsure where this falls in?

As the company is based in the USA, do I need to collect sales tax in the Tax section on the dashboard?

I am also wondering whether it would be beneficial for me to essentially operate as an American business... I would be based here in Australia but my products would be printed in the US and I would primarily target US customers. This would mean changing my currency to USD to suit that target audience. Is that something you can do? I'm not sure on the rules there! 

Thank you! 

[Victor]

Hi @JHaigh12,

First of all, I would just like to say congratulations on your first sale! Receiving that first order is a wonderful feeling and I hope there's many more to come for you and your business.

I would say that if you are based in Australia but you are primarily targeting customers in the US rather than those in your own country, you'd likely be best served having USD as your default currency rather than AUD. As you are based in Australia, you'll have to receive your payouts through Shopify Payments in AUD, but when using Shopify Payments you can still have USD as your default currency on the store. Please bear in mind that there are applicable conversion fees for when you are charging customers in one currency but being paid in another, and as you have already received an order, you would need to contact our support team in order to have your store currency selector unlocked in the Shopify admin.

Your tax situation may be slightly more complicated, and while I am happy to provide some general guidance in my reply, we would always recommend that you consult with a tax professional if you are unsure of your tax obligations.

I am not overly familiar with sales taxes in Australia, but assuming that the system is similar to how sales taxes are charged in North America and Europe when it comes to international customers, you likely won't need to charge GST to buyers in the United States. If this is the case, and if you are only targeting US customers and not Australian ones, then it'd be advisable to list your product prices without sales tax included. If you are selling to both Australian and American customers, and therefore need to list prices with GST included, it's possible to charge Australian customers the tax-inclusive price while American customers can pay the tax-exclusive one.

For US taxes, whether or not you are required to register for and charge sales tax in any given state depends on whether or not you have a tax nexus in the state in question. As you are using Printful to manufacture and deliver your orders, my thought is that by using their services you may be deemed to have a tax nexus in the states in which they have a physical presence (e.g. a warehouse). However, I did come across this helpful article on Printful's website which speaks more about charging sales tax in the US, as well as this guide on sales tax when drop shipping. From reading the article and the comments, my takeaway from this is that you likely will not need to charge sales tax to customers in the US when they purchase the item from your store, as you yourself will be paying sales tax when you order the item from Printful (unless you provide Printful with a resale certificate).

As I mentioned before, though, it is always advisable to speak with a tax professional if you need your liabilities clarified and confirmed. I hope the information I have provided you here is helpful nonetheless.