Australia has announced GST is applicable on certain supplies of low value goods at AU$1,000 or less as long as it is consumed in or imported into the country.
Effective 1 July 2018, the government of Australia announced that goods and services tax (GST) is payable on certain supplies of low value goods (namely goods valued at AU$1,000 or less) that are purchased by consumers or imported into Australia.
Either the electronic distribution platform (EDP) operator, the merchant or the re-deliverer will be liable to collect the GST on low value imported goods at the time of sale. These classifications are important as the new GST rules invoke a hierarchy in determining GST liability:
- the EDP operator is liable to collect GST;
- if the EDP operator does not exist , the merchant will be liable to collect GST
- if neither party exists, the re-deliverer will be responsible for collecting GST
Impact of the new GST rules
This new legislation will impact mainly non-resident entities with a business to consumer (B2C) model, such as those who are not registered for GST or those who are registered but do not acquire goods for the purpose of carrying out business in Australia.
If the supplier's GST turnover exceeds the annual registration turnover threshold of AU$75,000, the entity will be required to register for GST in Australia. The suppliers who fall under that criteria can either apply for standard GST registration or simplified GST registration, and will need to file on-going GST returns. These suppliers of low value goods are not required to issue tax invoices. Also where supplies of low value goods are made through an EDP, the GST liability on these supplies would shift to the operator of the EDP (such as the online marketplaces that act as intermediaries).
The Australian Taxation Office (ATO) has started to engage with the impacted taxpayers and distribute letters to overseas retailers who trade online.
Talk To TMF Group
If you wish to discuss your individual situation and identify possible impacts from the new GST rules on your operations in Australia, TMF Australia has a team of experts with in-depth knowledge and local experience in accounting and tax to help you navigate through this transition period.
We can take care of vital administrative tasks on a global scale to improve the efficiency of your organisation and also increase compliance, transparency, flexibility so you can focus on your core activity.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.