Australian retailers will have to wait a few months for the GST playing field to finally be levelled.
The extension of the Goods and Services Tax (GST) to low-value imports of physical goods imported by consumers will not commence until July 1, 2018.
From that date, overseas suppliers with an Australian GST turnover of AUD $75,000 or more who supply goods valued at $1000 or less to Australian consumers will need to collect GST on those goods.
For imports of more than $1000, the existing process that sees GST collected at the border will remain unchanged.
This extension of an online goods tax to low value items seeks to address a major issue faced by Australian retailers.
At present, overseas suppliers are not required to pay the 10% GST on their low-value sales to Australian residents. This gives them a price advantage.
They now have until July 2018 to implement system changes that will allow them to comply with the new requirements, and put them on an even footing with Australian-based suppliers.
Responsibility for collecting the GST and paying it to the Australian Tax Office (ATO) will lie with the overseas supplier. However, they will be able to access a simplified registration and reporting system.
Many overseas online retailers don’t deliver directly to Australia, prompting local buyers to use re-delivery services.
When goods are originally delivered outside Australia to a third-party provider of a shopping or mailbox service, the re-deliverer will be treated as the supplier. In other words, they will be required to collect the GST and send it to the ATO.
When goods are purchased via an electronic distribution platform (EDP), such as Amazon or eBay, they will be required to collect the GST and send it to the ATO.
This process means that consumers won’t need to take any additional actions when making online purchases worth $1,000 or less from overseas websites. The only thing they will notice is that 10% GST will have been added to the purchase price.
Overseas suppliers with sales to Australia below $75,000 will not be affected unless those sales are via an EDP or re-delivery service.
The imposition of GST on low-value imports may have a number of repercussions. It could see some overseas retailers decline to accept orders from Australia.
The cost of re-delivery service providers and EDP is expected to increase, passing on the cost to consumers.
Need help navigating GST?
To find out more about how LDB can assist with Australian tax and GST related matters, give us a call on (03) 9875 2900 or send us details via the contact form below.
