It used to be that if you bought something online from an overseas retailer and it had a value of less than $1,000, you wouldn’t have to pay GST.
Naturally Australian retailers were upset by this because if they sold the same product online it would incur GST. It put Australian retailers at a disadvantage because their goods were more expensive. After all, who is going to pay GST if they have the option not to?
Now the rules have changed. Going forward, goods that sold by overseas retailers with a value under $1,000 will also be subject to GST.
This is what you need to know if you are an overseas retailer or customer of an overseas retailer:
- If you are selling an item with a value of AUD1000 or less:
- If you are a non-Australian retailer and your turnover is above AUD75,000 per year you will be required to register for GST and pay GST.
- Paying GST means lodging a business activity statement and GST annual return in Australia.
- If you are selling to an Australian business which has an ABN and can claim back the GST, then the overseas retailer doesn’t need to charge GST (subject to certain conditions).
- You will need to provide a receipt that complies with Australian requirements.
- You will be able to access the simplified registration and reporting system.
- If you are selling an item with a value over AUD1000, there is no change. You will need to fill out an Import Declaration, and pay duties, taxes and charges at the border.
- You will need to pay duties and taxes on some goods (like tobacco or alcohol) regardless of their value.
You will need to pay duties and taxes on some goods (like tobacco or alcohol) regardless of their value.
If you are an overseas retailer that supplies goods through a platform or a re-deliverer, then it might be the platform operator or re-deliverer that needs to pay the GST instead of you, specifically the new rules:
- treat the operator of an electronic distribution platform (EDP) as the supplier of low value goods if the goods are purchased through the platform by consumers and brought into Australia with the assistance of either the supplier or the operator
- treat re-deliverers as the suppliers of low value goods if the goods are delivered outside of Australia as part of the supply, and the re-deliverer assists with their delivery into Australia as part of a shopping or mailbox service that it provides under an arrangement with the consumer
It will be interesting to see how this is implemented.
The rules are there but as is always the case in international taxation the question will be how the ATO is going to enforce these rules. Additionally, how will many overseas retailers know that they need to comply with these rules?
There shouldn’t be a problem where the overseas retailers are large, and the idea of charging re-deliverers and EDP’s is a good one because they will have sufficient scale for it to be practicable to enforce the GST laws. They in turn can enforce the laws on those using their platform or services.
In that case it would be worth the overseas retailers knowing and understanding what elections they can make and options that are available, such as the ability to claim input tax credits, so they don’t end up either over paying tax or spending more time on compliance than they are required to.
We offer a free 15 minute consultation to anyone who wants to talk about this issue. After dealing with the ATO for so many years, and after earning a track record of success, we would be happy to share our experience.
Adam Ahmed is an Australian international Tax Lawyers Sydney. Adam has over a decade of experience working at 3 of the big 4 accounting firms and one of the top tax law firms in Australia. He is currently the managing director of Adam Ahmed & Co.