Changes are coming to GST from 1 July 2018: is your business ready?
From 1 July 2018, Australian GST will apply to sales of low value goods (AUD $1,000 or less) that are imported by consumers into Australia.
Simply put, these GST changes mean that:
- All goods imported by Australian consumers, even those worth less than $1,000, will be subject to 10% GST;
- Overseas retailers who sell goods to Australian consumers and make more than AUD $75,000 per year will be required to register and impose GST. Under the old GST laws, this only applied to retailers who were selling goods valued at over $1,000.
The existing processes to collect GST on imports above $1,000 at the border are unchanged.
If your business meets the $75,000 registration turnover threshold, you will need to act now to review your business systems to ensure that you are compliant from 1 July this year. You will also need to:
- Ensure you are registered for GST;
- Charge GST to customers on low value imported goods;
- Lodge a return to the ATO.
Why the GST reform?
The Government’s intention is to ensure that Australian businesses, particularly small retailers, are not unfairly disadvantaged by the current GST exemption that applies to imports of low value goods. The new GST laws ensure that low value goods imported by consumers in Australia are treated in the same manner as goods that are sourced domestically.
Which businesses are affected?
- Suppliers of low value goods.
- Electronic distribution platforms (EDPs) – online marketplaces that assist in the importation of goods into Australia will essentially be treated as a supplier under these new measures, and be required to register for, collect and remit GST.
- Re-deliverers – re-deliverers are used by Australian consumers in cases where the overseas retailers do not deliver to Australia (e.g. offshore mailbox services). The re-deliverer will charge GST on the goods and for their services in bringing the goods to you, if they are registered or required to be registered.
Sales of low value imported goods to Australian GST-registered businesses
GST only applies to sales of low value imported goods to consumers in Australia. Your customer is not a consumer if they are a GST-registered business who purchases the goods for use in their business in Australia.
If your business is the recipient of low value goods, you should notify suppliers of your GST registration to ensure you are not being charged GST twice.
- Make sure you are not charged GST twice by providing a copy of your receipt that shows GST has already been paid if you were charged GST when you bought the goods; and the goods are low value goods.
- If you do not provide this receipt before GST is charged at the border, you will have to pay GST again and will need to seek a refund of GST from the supplier, by declaring or providing evidence that you paid GST when the goods were imported.
Your business systems will need to be able to determine whether the sales are made to consumers in Australia or to businesses that are registered for Australian GST.
If you are affected by these changes, speak to us to discuss process strategies and options to manage the impact of these new obligations on your business.