GST on Low Value Imported Goods

What are low value goods?  Is your business affected by the new law?

Generally, low value goods are physical goods that has a customs value of A$1,000 or less. Currently, only goods above A$1,000 are taxed at the border, (with the exception of alcoholic beverages and tobacco). This is now changing. From 1 July 2018, low value goods imported into Australia will now also be subject to GST, but instead of being taxed at the border, GST will be collected from the business that sell the goods to consumers in Australia.

The Federal Parliament has passed law that will extend goods and services tax (GST) to low value imports of physical goods imported by consumers. The existing processes to collect GST on imports above $1,000 at the border are still the same.

In summary, the reforms:

• make supplies of goods valued at A$1,000 or less at the time of supply connected with Australia. If the goods are purchased by consumers and are brought into Australia with the assistance of the supplier
• 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. In addition, 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
• allow non-resident suppliers of low value goods that are connected with Australia to elect to access the simplified registration and reporting system
• prevent double taxation.

Businesses that meet the registration threshold of A$75,000 will need to:

• register for GST
• charge GST on sales of low value imported goods (unless they are GST-free)
• lodge returns to the ATO.

These businesses may be merchants who sell goods, electronic distribution platform operators or re-deliverers. For goods imported in a consignment over A$1,000, any GST, customs duty and clearance charges will be charged to the importer at the border under existing processes.

This new law is formed so that businesses:

• will not charge GST on a sale when GST will be charged at the border, because an item is    
  • worth over A$1,000
  • a tobacco product, or
  • alcoholic beverage

• will not need to charge GST on a sale if clear that multiple goods will be shipped to Australia in one consignment worth over A$1,000. GST will be charged at the border instead.

If you think the above changes will affect you and you need advice on what to do, please contact 02 4732 3844 or visit www.judgeaccountants.com.au.