How The GST To Be Imposed On Imports of Low Value Goods Into Australia Will Affect You

The Australian Government has confirmed in the 2016-17 Budget that from 1 July 2017, GST will be applied to low value imports of goods by Australian consumers.

This follows an announcement made by the Government in August last year and is designed to boost the competitiveness of domestic suppliers who incur GST on sales of low value goods within Australia.

Currently, goods imported into Australia with a customs value that does not exceed $1,000 are not subject to GST. From 1 July 2017, it is proposed that GST will be applicable to goods below this threshold.

Under the proposed legislation for low value goods supplied to consumers in Australia, a ‘vendor registration model’ will apply, which requires registered vendors to collect GST at the point of sale. The new measure will require offshore vendors that have an Australian projected annual turnover of $75,000 or more to register for, collect and remit GST for supplies of low value goods.

The only difference between the supply of goods below and above $1,000 for offshore vendors will be the method of collecting the GST. Goods with a customs value above $1,000 will continue to be stopped at the border and GST charged to the importer.  The importer can either be the Australian customer or the offshore vendor depending upon the terms of trade.

While reaching the same outcome in terms of the amount of GST collected, the different GST collection methods may cause confusion, for instance where individual items are valued under $1,000 but the total cost of the transaction is more than $1,000. Further clarification will be required from the ATO as part of the consultation process on the new measure.

The vendor registration model is in line with the model adopted for the proposed ‘Netflix Tax’, which will require offshore suppliers to register and account for GST on the supply of things other than goods and real property to Australian consumers. The Netflix Tax measures are also intended to apply to offshore vendors from 1 July 2017.

As such, offshore vendors will need to have their systems and processes ready to apply GST to both low value goods and digital products sold to Australian consumers by July next year. More specifically, offshore vendors will need to assess the robustness of their sales systems to ensure that they can accurately identify whether they are selling to an Australian resident consumer.

A consultation period will be held in the lead up to the commencement of the new legislation to assist with clarifying some of the more practical issues associated with the new rules. Further, the Australian Government has stated that these arrangements will be reviewed after two years to ensure they are operating as intended and take account of any international developments.

We recommend that our international clients who sell to Australian consumers start a process now to ensure that they appropriately assess their requirement to register for and charge GST, and that their systems are capable of ensuring compliance with the new legislation by 1 July 2017.

By |2017-04-18T11:15:28+00:00April 18th, 2017|General|1 Comment

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  1. bbwhiteh April 18, 2017 at 2:12 pm - Reply

    eBay threatens to block Australian shoppers over GST in its submission to the enquiry.

    EBay says it will likely block Australian shoppers from buying goods from overseas if the government pushes ahead with plans to apply GST on all goods sold through the online marketplace.

    Goods bought from overseas sellers and imported to Australia worth less than $1000 are currently GST exempt, but Treasurer Scott Morrison wants to apply the 10 per cent tax to all sales from July 1 this year.

    “Regrettably, the Government’s legislation may force eBay to prevent Australians from buying from foreign sellers,” eBay Australia and New Zealand vice president Jooman Park wrote in a submission to a senate inquiry into the so-called “Amazon Tax”.

    “This appears to be the most likely outcome at present.

    “No tax would be paid to Australia and none would be owed. It would raise no revenue, deny Australians access to choice and lessen price competition.”
    Mr Park said an eBay ban would not even help local bricks and mortar retailers – who have been lobbying for the tax – and nor would the tax generate significant revenue, because Australians would simply move to “opaque parts of the internet” where they could buy from online retailers that did not comply with the new rules.
    The proposed tax treats online sales platforms like eBay and Amazon as the supplier, meaning they would be responsible for applying the tax.

    But eBay said that it did not own, hold or distribute goods, nor handle payments.

    EBay said blocking overseas sellers was “the most likely outcome at present”.

    “In reality, buyers use the eBay search engine to find goods and choose which seller to transact with,” Mr Park said.

    “Deeming eBay to be a seller is a fiction designed by the Government to give the impression of raising revenue.”

    eBay said Australians would shop on “opaque parts of the internet”.
    Mr Park also said the proposed tax was overly complex, with goods worth under $1000 having tax applied by the seller while goods worth over $1000 would be shipped tax-free and taxed by Australian customs upon entry to the country.

    “Separate goods in one box would appear to attract both tax treatments,” he said.

    Mr Park suggested shipping companies, including Australia Post and its parcel arm StarTrack, be made responsible for tax.

    “These companies can require buyers to declare whether a good is new and to nominate a value of the good as part of the pricing of parcel delivery to Australia,” he said.

    In its submission, Amazon said GST should be levied on all goods but said it shouldn’t have to collect the tax, agreeing with eBay that shipping companies should be made responsible.

    The July 1 start date for the new tax was “completely unrealistic”, with both businesses and government unable to implement required changes by then, Mr Park said.

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