You have built a product that generates recurring revenue — subscriptions, one-time purchases, or usage-based billing. Whether it is a web app, a mobile app, a browser extension, or an API, the ATO treats that income as business income from day one. And the way you structure and report it matters enormously as it scales. This guide addresses the specific tax questions that solo founders and indie developers ask us most — particularly around international revenue, GST registration, and when a company makes sense.
Do I Need an ABN?
If you are selling access to software or digital products — even if everything runs automatically and you are not actively working for a client — you are running a business and need an ABN.
Operating without an ABN when you should have one is a compliance risk, and it also prevents you from legitimately claiming GST credits on your development costs and subscriptions.
What Income Must Be Declared?
If you sell lifetime deals in a single launch period (e.g. $80k in one month), the ATO treats this as income in the year received — not spread across future years. Plan for the tax liability in the same financial year.
- Stripe, Paddle, Lemon Squeezy, or Gumroad revenue — all assessable in AUD at the exchange rate on each payment date
- App Store (Apple) and Google Play developer payouts
- SaaS subscription revenue at any pricing tier
- Lifetime deal sales (e.g. AppSumo launches)
- API usage-based billing
- Affiliate commissions earned through your product ecosystem
- Consulting or custom development work alongside your product income
GST and International Software Revenue
This is where solo founders consistently run into issues. The key rules:
GST for Software Products — Key Rules
Threshold: Once your total business turnover exceeds $75,000/year, GST registration is compulsory.
Australian customers: You must collect and remit 10% GST on sales to Australian-based customers.
Overseas customers: Sales to non-Australian customers are typically GST-free as Exported Services — but you must still be registered once the threshold is met.
Platform-collected GST: Some platforms (Paddle, Apple, Google) act as the "merchant of record" and handle GST obligations on Australian sales directly. This does not eliminate your registration obligation.
Common GST Mistakes for SaaS Founders
Many solo founders think "my customers are mostly overseas so I don't need to register." Incorrect — once total turnover exceeds $75,000, registration is required regardless.
If a platform like Paddle collects GST on your behalf for Australian sales, you need to understand your net reporting obligations. Your revenue figure may already be net of GST collected by the platform.
Stripe alone does not handle Australian GST obligations for you.
What Development and Business Expenses Can I Claim?
The key points are below:
- Cloud hosting and infrastructure — AWS, GCP, Azure, Vercel, Fly.io monthly costs
- Software and SaaS subscriptions used in your stack — GitHub Pro, Linear, Figma, Notion
- Domain names and SSL certificates
- Third-party APIs and services — Twilio, SendGrid, Stripe fees, authentication services
- Contractor payments — designers, developers, VA (with proper invoices and ABNs)
- Marketing and growth spend — SEO tools, advertising, Product Hunt launches
- Accounting software and bookkeeping costs
- Computer, peripherals and home office setup (business-use portion)
- Professional development — courses, conferences, technical certifications
- Legal and compliance costs — terms of service, privacy policy, incorporation
Company or Sole Trader — The PSI Question
This is the most nuanced question for solo founders. The ATO's Personal Services Income (PSI) rules are designed to prevent individuals from routing personal-effort income through a company to access lower tax rates.
The good news for product businesses: PSI rules are generally less likely to apply when:
- Revenue comes from a product (software subscription) rather than your personal service to specific clients
- You have multiple unrelated customers — the income is not tied to any single client relationship
- The product operates autonomously — revenue is generated without you delivering work to specific individuals
PSI Assessment for SaaS Businesses
Pure product revenue (SaaS, app, digital downloads): PSI unlikely to apply — company tax planning is viable
Mixed income (product + consulting for individual clients): PSI assessment required — portion may be PSI
Consulting-only with a "product" label: PSI likely applies — company may not provide the expected tax benefit
When in doubt: a professional assessment of your specific income profile is far cheaper than getting it wrong
A company taxed at 25% versus personal rates of up to 47% on the same profit represents a very significant difference as your MRR grows. The right time to set up a company is before you need it — not after.
Foreign Currency Income
If you receive revenue in USD, EUR, or other currencies, every payment must be converted to AUD at the exchange rate on the date of receipt. This applies to Stripe payouts, PayPal transfers, and any other foreign currency income. Maintaining accurate records of conversion rates is essential — a bookkeeping system that connects directly to your payment processor (e.g. Xero + Stripe integration) handles this automatically.
General information only
This article provides general tax information only and does not constitute personal tax, legal, or financial advice. Tax rules can change and individual circumstances vary.
If you would like advice based on your situation, please get in touch with the practice.
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