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felisse_dc
Community Member

Australian GST as a Client

Hi,

 

I've been reading a lot about GST for freelancers but nothing on how it works for clients.

 

Would clients be able to claim GST credits on their Upwork payments to freelancers? Would this only apply to freelancers in Australia or also overseas?

 

Thank you,

Felisse

23 REPLIES 23
nmoore36
Community Member

I would love to hear more about this as well.

 

At it's core, I'm suspecting that there's no GST (as we're not paying the freelancer directly - we're paying Upwork for a service and they're in turn paying a freelancer to deliver that service).

 

However, I suspect with all these GST changes for International companies happening recently - that this might end up changing.

3b140a45
Community Member

I can't find any information about this eiher and the "help" option leads me back here.

 

Has there been any information provided by Upwork?

Not that I've seen unfortunately
VladimirG
Community Manager
Community Manager

Hi Nigel and Karen,

 

Please note that GST is assessed on fees for services Upwork provides to freelancers and agencies in case they don't provide a valid ABN and acknowledge that they're registered for GST.

 

Please check this Help article and announcement thread for more information. Please consult your tax advisor if you have more questions about specific Goods and Services Tax (GST) responsibilities. You can also visit the Australian Taxation Office site.

~ Vladimir
Upwork

Thanks Vladimir, I have read those articles but it doesn't answer the question which is if Upwork charge us as clients GST in your charges?

Hi Karen and Nigel,

 

To clarify, Upwork doesn't charge GST to clients.

 

 

~ Vladimir
Upwork

Vladimir - then I suggest your financial team investigates the Australian GST law - as there's an almost 100% chance that Upwork should be charging GST you Australian clients.

https://www.ato.gov.au/Business/International-tax-for-business/GST-on-imported-services-and-digital-...

Thanks Vladimir, however as Karen says - those linked articles don't answer / address our situation.

We're not freelancers - we're clients paying Upwork for you to then hire freelancers to deliver the work. 

 

Can you please point to something that clarifies Upwork's GST stance on this?

If you were to follow the letter of the law as to my understanding of it, Upwork would need to include GST on every single transaction that they do (even if the freelancer doing the work isn't registered for GST) because Upwork is the entity that we are paying for the work to be done (we aren't paying the client directly - Upwork is operating as an agency where we pay you - you then keep your commissions / profits and then pay the contractor).

Yeah, our freelancers are including GST but we are not sure how to claim as a client/company as the transactions don't include GST. Something seems broken here legally?

Hi Katt,

 

Note that Upwork will not charge GST on fees freelancers charge their Upwork clients (these are the transactions I presume you're referring to) for work they provide for them.

Unless a valid ABN number is provided and the freelancer acknowledges that they are registered for GST, Upwork will asses GST on fees for services provided by Upwork. That includes Upwork Service Fee and payments for Membership and Connects. You can find more information in this help article.

~ Vladimir
Upwork

Can you please elaborate and make it bit More clearer?

So my freelancer has input her GST.

We have given ABN

But why still we don't see GST in transaction receipts ?

How can we claim?

Thanks

Hi Katt,

 

GST is applied on Upwork fees, including the Upwork service fee, premium Upwork memberships, and purchases of Connects, not on freelancer's earnings. This tax will be collected by Upwork and remitted to the Australian Taxation Office, unless the freelancer provides a valid ABN number and acknowledge that they're registered for GST. I strongly encourage you to review this Help article in order to find more details about this charge. Let us know if you need further assistance or clarification.

~ Vladimir
Upwork

CONVOLUTED!

I have read the information of the linked page, but as a client employing talent on Upwork and changing currency from AU$ to US$ I find the explanation and the whole process overly complicated and still not clear to me.

- Please do not suggest for me to ask my accountant as this is a very specific niche best explained by Upwork.

- Yes, Upwork is simply following Australian Government procedures but Upwork has strong vested interest on all sides of the transaction, therefore should make sure that complex procedures are clearly explained.

- Upwork needs to employ some of the talent available and design a clear, visual fact sheet to better explain the situation. Especially from a client's point of view (not just the freelancer)

I look forward to updated information and thank you in advance

Hi George,

 

Thanks for sharing your feedback about this information. I'd like to clarify that Upwork is required to collect the Goods and Services Tax (GST) on the services we provide freelancers. We do not keep the GST we collect; this is simply a tax that the Australian government requires us to collect and remit back to them. 

GST is assessed on fees for services provided by us to the freelancers, not on fees freelancers charge their clients for services they provide. So if you're a client, you will see no change to the invoices between you and your freelancers.

~ Valeria
Upwork

So I've just read all of the above comments and as previous commenters have said, no one has addressed the original question.

 

If I spend $100 AUD on a freelancer to complete work, do I claim 10% of their fee as GST on my tax here in Australia? It's a pretty simple question. No link or article or previous post has answered this question so please don't direct me to one of the FAQs.

Hi Scott,

 

Upwork is collecting the Goods and Services Tax (GST) on the services we provide to the freelancers to meet our own tax obligations. However, we’re not acting as a GST agent for freelancers and clients or intervening between what’s required between the freelancers and clients. Please consult your tax advisor regarting GST for the services your freelancers provide to you.

~ Valeria
Upwork

Hi Valeria - I would encourage the finance & legal team at Upwork to talk to the ATO ASAP about this, as I believe the way you're currently doing it is incorrect and not in line with the Australian tax codes. Upwork may very well find itself with a rather large tax burden if the ATO ever investigates this.

This is tthe answer;

 

GST does not apply to your business purchases of imported services and digital products if you are a business registered for GST in Australia.

For overseas suppliers not to charge GST, they are required to obtain:

  • your Australian business number (ABN), and
  • a statement that you are registered for GST.

---------

So if you use a freelancer on Upwork, they won't charge you GST and therefore you can't claim GST.

 

They are meant to get your ABN and then confirm you are rregistered with GST. I've seen this happen with Crazy Domains (they have a checkbox). I've never seen an Upwork freelancer ask.

 

 

afrat
Community Member

I'm with Nigel. I feel as though Upwork might not be up to date with the current Australian tax codes. Fiverr are adding GST to invoices for clients for purchases. eBay have also just started adding GST for buyers, for sales from Australia and overseas countries. I feel like Upwork should be doing the same. Hopefully, a Community Manager from this discussion could mention something to the finance & legal team at Upwork.

e4322934
Community Member

Any update on this topic? It's already 2022. Can we as clients claim GST for the invoices we pay in Upwork? 

Hi Olivia, 

GST is currently only assessed on fees for services provided by Upwork to freelancers, not on fees freelancers charge their clients for services they provide. You may need to consult a local tax expert about proper ways to assess GST on the fees freelancers charge you and how it may be different depending on the freelancers' location. 

~ Valeria
Upwork
699741b9
Community Member

It's tax time so I am currently looking to understand this for FY23. 
This forum states that upwork is charging GST on the fees. 

So my understanding is that for $100 spent. 5% of that is fees, of which 10% is GST. 
So broadly, for $100 spent, there is a GST credit of $0.50. 
Is this correct?

 

If so, none of the upwork invoices that I am able to download have any mention of this GST. 

Where can we get a copy of the taxable invoice?

Or a statement for the financial year? 

Hi Natalie,

 

We will apply GST to applicable Upwork fees, including the Upwork service fee, premium Upwork memberships, and purchases of Connects. This tax will be collected by Upwork and remitted to the Australian Taxation Office, unless you provide a valid ABN number and acknowledge that you're registered for GST.

 

In the case of freelancer service fees, if your contract amount is $100 and you pay the 10% freelancer service fee ($10.00), we will apply the 10% GST to only the $10 service fee, meaning we will collect $1.00 in GST. These amounts will be calculated in U.S. Dollars.

 

~Andrea
Upwork
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