GST on imports: new rules for goods under $1,000

July 2017

Last month, Parliament passed legislation that will see GST applied to all consumer imports regardless of their value.

The Australian Parliament has passed legislation that will see GST applied to all consumer imports, regardless of their value. Such imports below $1000 were previously excluded from GST.

The perceived preferential treatment of Internet shopping from overseas websites has been a contentious issue for some time. This is particularly true in the retail sector which has lobbied hard to ensure that where a business is benefiting from sales to Australian consumers, the purchase is taxed the same as it is for local retailers.

The start date for the change has been pushed back to 1 July 2018; however businesses that import goods into Australia will need to review their position to check if supply chains are impacted by the change and determine which entity is liable for GST.    

When do the new rules apply?

The new rules are intended to apply to situations that are not captured by the existing GST importation rules because the goods are worth $1,000 or less. 

While the start date of the change has been pushed back until 1 July 2018, businesses importing goods into Australia will need to review their position to check whether supply chains are affected and determine which entity is actually liable for the GST.

Who do the new rules apply to?

Australian businesses that purchase low value goods from overseas should also check to make sure that overseas suppliers are not imposing GST on supplies of these goods unnecessarily.

The rules are designed to only apply when goods are delivered to Australian consumers who are: 

  • either not registered for GST in Australia; or
  • where the goods do not relate to an enterprise or business being carried on in Australia.

If your business imports goods into Australia and is registered for GST, the tax should not apply to low value goods you import. GST applies where the supply is to an Australia consumer – it doesn't matter who makes the purchase. So, you could have the scenario where GST applies to a gift purchased for you by an overseas relative if the gift is shipped directly to you.  Where goods are purchased through electronic platform providers, such as Amazon, eBay or Alibaba, responsibility for collecting the GST will rest with the platform provider as they manage the customer billing on behalf of the supplier.

However, it will be more difficult for the Government to force foreign companies to comply with the new rules leading to concerns about the costs of the administration required to enforce GST on low value goods.

For overseas suppliers, if the value of goods sold into Australia is greater than $75,000 per annum, the entity is required to register for GST. However simplified options are available for those that only export to Australia and have no need to claim tax credits in Australia.

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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