New rules regarding the GST treatment on importing “low value” goods will be in place from 1 July 2018. Will these changes affect you?
Until 1 July 2018, a GST and customs duty exemption applied to imported goods with a customs value of less than $1,000, however from this date the exemption is set to be abolished.
The new system is likely to have a negative impact for online shoppers, however is intended to provide competitive neutrality for domestic retailers that have historically been at a disadvantage against foreign retailers who have been able to sell equivalent goods online to Australian customers exclusive of GST.
Under the new rules, an offshore supplier will be required to register, collect and remit GST where the following conditions are satisfied:
- there is an offshore supply of goods (supplier delivers goods to Australia)
- the goods are “low value’ goods (less than $1,000)
- the supplier has an Australian GST turnover of $75,000 or more, and
- the supply is connected with Australia (recipient must be a “consumer” of the supply)
Where these conditions are fulfilled, the rules apply irrespective of the way the consumer purchases the goods, whether online, by telephone, in person in a store overseas, or from a store in Australia if the goods were located outside Australia.
Note, a supply is not considered to be connected with Australia if the goods are purchased for business use in Australia (as opposed to for personal consumption). In this case, business clients can provide the supplier with their ABN and a statement declaring they are registered for GST, to ensure that GST is not charged.
Should you wish to discuss this topic further, please don’t hesitate to contact us now.