Looking for instructions for Magento 2? Take a look at the new post How to set up a Magento 2 store for Australia.
Running Magento stores in Australia differs very little from any other country, but there are a few things that you need to do for compliance with ATO requirements and to ensure that Magento calculates taxes correctly. The following is an outline of the necessary configuration and settings you may need to consider when setting up Magento for an Australian store.
First, the basic information for the store must be configured for Australia:
Countries options
- Default country = Australia
- Allow countries = ensure Australia is selected
- Timezone = AUS Eastern Standard Time (Australia/Sydney) (as appropriate)
- Locale = English (Australia)
Next, the currency must be configured for Australian Dollars:
Currency Options
- Base currency = Australian Dollar
- Default display currency = Australian Dollar
- Allowed currencies = ensure Australian Dollar is selected
Shipping settings are important for shipping, and also for tax calculation. You should enter information appropriate for your shipping location, which must be in Australia for shipping and tax calculations to work correctly.
Origin
- Country = Australia
To set tax correctly for Australia (prices shown include GST) and to apply discounts correctly, the following should be set:
Tax Classes
- Tax Class for Shipping = Shipping
- Tax Based On = Shipping Address
- Catalog prices include tax = Yes
- Shipping prices include tax = Yes
- Apply Tax After Discount = Yes
- Apply Discount On Prices Including Tax = Yes
- Apply Tax On = Custom price if available
- Default Country = Australia
- Display Cart/Order Prices = Including tax
- Display full tax summary = No
- Display Shipping Prices = Including tax
- Display Product Prices = Including tax
These settings will instruct Magento that all prices entered into the system already include GST (which is most common for Australian retailers) and that prices displayed to the customer should be displayed including tax. You may need to adjust the settings for shipping appropriately, depending on whether your chosen shipping method should include GST or not.
Please note that the upcoming release has some changes to these settings. For Community Edition 1.4 (and Enterprise Edition 1.6), use the following instead:
Tax Classes
- Tax Class for Shipping = Shipping
- Tax Calculation Method Based On = Total
- Tax Calculation Based On = Shipping Address
- Catalog prices = Including tax
- Shipping prices = Including tax
- Apply Customer Tax = After Discount
- Apply Discount On Prices = Including tax
- Apply Tax On = Custom price if available
- Default Country = Australia
- Display Product Prices In Catalog = Including tax
- Display Prices = Including tax
- Display Subtotal = Including tax
- Display Shipping Amount = Including tax
- Include Tax in Grand Total = No
- Display Prices = Including tax
- Display Subtotal = Including tax
- Display Shipping Amount = Including tax
- Include Tax in Grand Total = No
The easiest way to meet the ATO requirements for ABN and contact number on invoices is to add these details to your address information:
Invoice and Packing Slip Design
- Address = your address + ABN and phone number
You might also choose to add this information to the transactional email template for invoices. If you want to use the PDF invoices however you will need to alter the address above or modify the PDF rendering, which we may cover in another post.
To set up the 10% GST to be applied on products and shipping, Magento requires the addition of an appropriate tax rate and rule:
Here we add a tax rate for GST so that Magento will know how much tax to calculate.
To add a rate, click Add New Tax Rate in the top right and fill out the following information:
- Tax Identifier = GST
- Country = Australia
- State = *
- Zip/Post Code = *
- Rate = 10.00
Save the rate and proceed to set up a rule for GST.
Sales → Tax → Manage Tax Rules
Tax rules determines when rates should be applied. In this case we want to set it up to apply GST anywhere in Australia.
Click Add New Tax Rule in the top right and fill out the following information:
- Name = GST
- Customer Tax Class = Retail Customer
- Product Tax Class = Taxable Goods | Shipping
- Tax Rate = GST
Save the rule and GST will be completely set up. It's a good idea to remove any other tax rules that are present by default, unless they will also be relevant for you.
Rename Tax to GST
Something that is often overlooked is that you must include a line in your invoices specifically indicating the amount of GST that has been applied. This can be done in a few ways but a simple method is to use the translation files included as part of the locale. This allows for easy replication across websites by copying the files from one site to another.
To modify the translation, creating an app/locale/en_AU directory and copy the Mage_Sales.csv file from the en_US locale into it. Open this file as a spreadsheet (such as in Excel or OpenOffice.org) and find the line with the word "Tax". Modify the value in the right column to be "GST". This will appropriately change the text that is displayed to the customer.
Similar to the above, you can edit the translation files to change the text "Invoice" to "Tax Invoice". This is left as an exercise for the reader.
After applying all of these changes you'll have addressed the essentials for running a Magento store in Australia. We recommend also installing our Magento Australian extension, which adds Australian regions, Australia Post shipping, direct deposit and BPAY payment methods. Also be sure to watch out for Magento Community Edition 1.4 as it includes several key improvements to the tax system to make working with discounts easier.