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.
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