Set Australia as the Main Tax Zone
Part 3 is the final step to make sure your GST tax component gets applied to all of your products. In this tutorial we will need to change the Main Tax Zone in the configuration tab to apply Australia as the default tax zone country.
Go to the Configuration tab by click on System > Configuration.
click on the 1) Main tab. If the Main Tax Zone is not set to Australia, click on the 2) Edit icon (the icon with a notebook and pencil).
Find and click the checkbox next to Australia.
Scroll up and click OK.
The screen should return you back to the Main tab and show 1) Australia as the Main Tax Zone. Make sure that your currency is set to the 2) Australian currency ($AUD).
On the top right hand corner, click on Save & Close.
Applying Default Rates to Older Products
If you created some products before setting up GST as the default tax rate, you will need to go into those products, select Tax Category and click Default Tax Category.
Click Save & Close.
After you save your item, you will be returned to the Products page. Then product prices should be applied with the proper tax rate on the frontend.
If you click on your product, you can see that the Tax Category is set to "default" while the price includes the GST rate of 10% or $45,980 ($41,800 X 1.1%).
When you create new products remember to set the Tax Category to Default tax category.