How does GST on PayPal payments work for Australian Taxation?
"TL;DR - my understanding of the rules is that if you are required to register for GST (earning more than $75k per annum), you would be required to pay GST on these items. To clarify firstly: taxable income, and goods and services tax, are two different things. Any income you receive needs to be considered for income tax purposes - whether or not it ends up being taxable income would be too much to go into here, but generally you would take your expenses, and any deductions, away from your income to arrive at what would generally be the taxable amount. An accountant will help you do this. Income tax is paid by anyone who earns income over the tax free threshold. By contrast, goods and services tax is a tax paid by business (of which you are running one). Of course, this is passed on to the consumer, but it's the business that remits the payment to the tax office. However, GST isn't required to be charged and paid in all cases: The key in your situation is first determining whether you need to register for GST (or whether indeed you already have). If you earn less than $75,000 per year - no need to register. If you do earn more than that through your business, or you have registered anyway, then the next question is whether your items are GST-free. The ATO says that ""some education courses [and] course materials"" are GST-free. Whether this applies to you or not I'm obviously not going to be able to comment on, so I would advise getting an accountant's advice on this (or at the very least, call the ATO or browse their legal database). Thirdly, are your sales connected with Australia? The ATO says that ""A sale of something other than goods or property is connected with Australia if ... the thing is done in Australia [or] the seller makes the sale through a business they carry on in Australia"". Both of these appear to be true in your case. So in summary: if you are required to register for GST, you would be required to pay GST on these items. I am not a financial advisor or a tax accountant and this is not financial advice." "Regardless of wether or not you are registered for GST, you are legally required to include a GST total on every invoice sent to an Australian customer. This GST total must be 10% of the payment amount if you are registered for GST, or it must be $0.00 if you are not registered for GST. Since all GST transactions with the government are in Australian dollars, this amount on the invoice also needs to be in AUD, or else it's impossible for you and your customer to both be working off the same GST amount. This means you need to transfer your money from USD to AUD in PayPal's ""Manage Currencies"" area before you can send a tax invoice to the customer, so that you can provide the correct amount in AUD based on the actual exchange rate for the day (and you are required to send invoices promptly). Alternatively, you can collect payments in AUD using PayPal or use a different payment service that collects payments in USD but immediately converts them to AUD for sending an invoice (australian paypal competitors often provide this service)."
PayPal is free for buyers, taking their profit from the sellers -- in much the same way that credit cards take a percentage from the seller (though they will also charge you interest if you don't pay off the entire balance every month). As far as I know, there's nothing that keeps a vendor from having a different price for PayPal customers than cash customers... but that would show up in the number displayed by PayPal before you authorize the purchase, so if you're paying attention it shouldn't be possible to sneak it by you. PayPal has several modes of operation. I'm not aware of one where they hold your balance. Normally you either give them your credit card info, or you give them information about (one of your) bank account(s) and authorize them to do electronic funds transfer from and to that account on your behalf. I've always stuck with the credit card approach; I trust PayPal but I don't trust them that far, on principle. If I was going to link them to an account, it would be a small account I'd create for that purpose, NOT my main savings/checking accounts! (Hm. Actually, I do have one account which normally floats around $500 -- it's the one I dump accumulated pocket change into -- and I could use that. If I ever feel a need to do so.) PayPal does reduce the risk of credit card numbers being abused, by reducing how many people you've given the number to. Depending on what kinds of purchases you make, that may be a security advantage. It certainly doesn't hurt. Personally I have no problem with giving my card number directly to a serious business, but on eBay or sites of that sort where I'm dealing with individuals who are complete strangers I do like the isolation that PayPal provides. In other words, eBay is exactly the environment where I DO use PayPal. After all, that's exactly what PayPal was created for. "One option might be to set up a separate bank account and a separate credit card account, which you would use only for your ebay transactions.  I have a friend who does a lot of selling on ebay, and this is exactly what she did.   It's reasonable to want to protect your personal finances from any complications that might arise with PayPal and/or ebay.  But since you definitely have to provide a bank account and c.c. number (there's no way around this), the best solution might be to set up separate ""ebay-only"" accounts.  And be sure not to link them to any of your personal accounts, for added protection. If you're planning to do a lot of selling, this is probably a good idea anyway just for record-keeping purposes. If you do a lot of selling on ebay, you might consider setting up a ""merchant account"". There are some limitations on international transactions (currently you can't sell to residents of UK, Australia, or France), and payment processing is a few days slower. But there seem to be fewer fees/risks/etc associated with a  merchant account. I don't know much more about it, but here's an article from an ebay seller, including pros and cons of PayPal vs. merchant accounts. http://www.ebay.com/gds/Selling-on-eBay-without-PayPal/10000000021351301/g.html" I have a PayPal account that I have linked to my bank account.  My PayPal balance is always $0.  When I make a purchase with PayPal, PayPal will automatically withdraw the funds from my bank account to make the purchase.   PayPal does not ask my permission for each purchase.  I probably gave them permission to do this when I linked my bank account.  Or perhaps the PayPal purchase process includes this permission.  I don't read the text closely.  Or I should add, that I probably read it at one point, but since I do it on a regular basis, I don't read it now, and I don't recall what is on the checkout page. "For practical purposes, I would strongly suggest that you do create a separate account for each business you may have that is used only for business purposes, and use it for all of your business income and expenses. This will allow you to get an accurate picture of whether you are making money or not, what your full expenses really are, how much of your personal money you have put into the business, and is an easy way to keep business taxes separate. You will also be able to get a fairly quick read on what your profits are without doing much accounting by looking at the account balance less future taxes and expenses, and less any personal money you've put into the account. Check out this thread from Paypal about setting up a ""child"" account that is linked to your personal account and can be set up to autosweep payments into your main account, should you like. You will still be able to see transactions for each child account. NOTE: Do be careful to make sure you are reserving the proper amount out of any profits your startup may have for taxes - you don't want to mix this with personal money and then later find out that you owe taxes and have to scramble to come up with the money if you have already spent it This is one of the main reasons to segregate your startup's revenues and profits in the business account. For those using ""brick and mortar"" banking services rather than a service like Paypal: You likely do not need a business checking account if you are a startup. Most likely, you can simply open a second personal account with your bank in your name, and name it ""John Doe DBA Company Name"" (DBA = Doing Business As). This way, you can pay expenses and accept payments in the name of your startup. Check with your banker for additional details (localized information)." "Best answer I've heard when asking this question is ""because they can."" Traditionally Australia was remote enough, and it was justified due to the cost of shipping and importing... but now that's not the case and they're still sticking it to you, and you're still paying it.  Even digital media (music, video, software), the poster-child of an item that has zero difference in delivery cost, cost more in Australia and there is absolutely no reason for it outside of the fact that you're going to pay it. Sorry dude... Start finding ways to fight back.  Find a US based VPN and route your purchases through the U.S., maybe save some money that way?  Make your physical purchases overseas and ship them home when you happen to leave the country (if ever).  Have friends do so when they leave the country... Good luck!" Yes, Paypal has such a button you can use, but to be clear, the money you receive is taxable income. Your website is providing 'value' to the readers, and while they may feel they are making a gift to you, it's earned income as far as the IRS is concerned.  (This assumes you are in the US, you may wish to add a tag to indicate your country) Yes. You must register for GST as well, if you will be making over the threshold (currently $60,000). That's probably a bonus for you, as your home office expenses will mostly include GST, but your income will most likely be zero-rated. Check with an accountant or with the IRD directly. Just be certain to put aside enough money from each payment to cover income tax, GST and ACC. You will get a very large bill in your second year of business. Congratulations on completing the GSoC. I think the short answer is No, and you ought to just hang on to the card and gradually spend it down on your day-to-day expenses: you can spend money off a US prepaid card in Australia, or with online US merchants.  That will probably be a better deal than trying to cash it out, unless you really desperately need the cash.