Imports Into Australia – GST Changes
Tax Alert - March 2018
From 1 July 2018, Australia’s GST regime for remote sales of goods to consumers is changing. Similar to the ‘remote services’ rules for services, non-resident suppliers of goods will be required to register and charge 10% Australian GST to end consumers if they exceed the Australian GST registration threshold of AUD$75,000 in a 12 month period (excluding Business To Business (B2B) sales). Separate rules apply to collect the 10% GST whe sales are made via an electronic distribution platform (EDP) or use a re-delivery service provider.
The new rules will not apply where the customs value of goods exceeds AUD$1,000 (or goods form part of a larger consignment exceeding AUD$1,000); in this instance GST will be separately collected at the border as is currently the case. The rules will not apply is your Australian customer has provided you with their ABN number and has stated that they are GST registered or the supply is of alcohol or tobacco. In addition, where a business is selling through and EDP, the EDP will be deemed to be the supplier for GST purposes. Similarly, if the customer is using a redelivery service provider the GST obligations fall to the deliverer.
Where GST registration is required, there will be two different registration systems – simplified or standard. Under the simplified registration an ABN number is not required and no input tax credits are able to be claimed. However adjustments and corrections are able to be made in subsequent GST returns, e.g. refunds for returned goods and incorrectly charging GST on B2B transactions.
Given this deadline is fast approaching, now is the time to consider whether these rules will impact on your business and begin to update contracts and software to take this into account. This considerations include:
- Are contracts worded as GST inclusive or exclusive?
- If they are inclusive of GST, do you need to increase your prices?
- Does your sales system currently allow multiple rates of GST?
- Do you hold enough information to determine whether a customer is an ‘Australian consumer’ or a GST-registered business customer?
- Is your currency conversion method an ‘acceptable’ method?
- Do you sell any ideas which are GST free or subject to a reduced rate of Australian VAT?
- How will you deal with goods sold pre-1 July 2018 but shipped post-1 July 2018?
Interestingly, the ATO considers that NZ is in the top five largest sources of sales to consumer in Australia so we can expect New Zealand businesses will be targeted by the ATO. Now is the time to get prepared.