GST on Low Value Imported Goods
What is it?
From 1 July 2018, all goods imported to Australian consumers will now be subject to 10% GST. Previously goods that were considered low value ($1,000 AUD and under) were exempt from GST, however the government has now legislated this ‘loop hole’ to include all imported goods.
Those responsible for the collection of GST may be merchants who sell goods, online marketplaces (electronic distribution platform operators) or re-deliverers.
What does this mean for businesses who import goods to Australia?
- Vendors will collect GST on low value goods at the time of the sale and report these on their monthly or quarterly Business Activity Statements.
- Low value items are valued on a per item basis, not on the aggregate value of the total shipment order.
- Goods with a value of $1,000 or more will continue to pay GST at the time of importation at The Australian Customs and Border Protection Service (ACBPS).
- The deferred GST system is still available for importing goods.
- Non-resident companies who import to Australian consumers will be required to report and pay GST to the ATO under the (BAS) Business Activity Statement scheme. They will be required to register for either the simplified or full business activity system. The simplified system is a quick online way to report and lodge GST on income only with no ABN required, whereas the full system is for those entities that hold an ABN and want to claim GST credits.
- The GST system will remain unchanged, only those businesses that exceed the $75,000 registration threshold will be required to register and withhold GST.
What actions need to be done?
It is important to review these changes prior to 1 July 2018 to ensure your systems are compliant from that period moving forward. You may need to assess if your GST turnover will now be over the ATO registration threshold, register for either the Simplified or Full Business Activity system, review pricing changes and consider foreign currency exchange requirements.
For more complex business structures you may need to determine at what point the GST will be collected. There are certain provisions available that ensure goods are not being double taxed.
For a more detailed review of these changes and how they may impact your business, please contact our International Tax team on 9981 2300 who will review your business structure and advise on specific changes required for your business.
Further details can also be found on the ATO Website.