Changes will expand Australia’s GST base
Australia’s Goods and Services Tax (GST)* rules on the import of goods into Australia will change 1 July 2018 as Australia continues to modernise its tax rules to make them more applicable to new business models being used in the digital economy.
Australia’s GST rate is 10% and a business is required to register for GST if its actual or anticipated sales over the next 12 months exceed $AUD 75,000.
The current GST rules for foreign importers
At the present time, foreign companies importing and selling goods to Australian consumers are not required to charge GST when the total value of goods sold to the consumer is less than $AUD 1,000 (the sale of “low value goods”).
The GST rules from 1 July 2018
To ensure that foreign importers are treated in the same way as Australian retailers, all imported sales to Australian consumers by a foreign business will now be required to charge GST. The lower threshold is being removed.
GST will be paid at the Australian border along with customs duty where the value of the goods exceeds AUD $1,000.
Where the goods have a total value below AUD $1,000, then either the retailer or the Electronic Distributions Platform selling the goods will be required to charge GST directly to the Australian consumer and remit the GST to the Australian Taxation Office (ATO) on a periodic basis (monthly or quarterly depending on turnover).
Australian Tax Office support
Australia’s tax authority (the ATO) has issued a webcast about the changes (including the registration requirements) and will host in-country seminars in the UK, Belgium, China, Hong Kong and the US in November 2017.
For advice on GST in Australia contact our Alliott Group Brisbane associate Jamie Towers, Tax Partner at Hanrick Curran. Hanrick Curran helps many international clients to manage their Australian tax compliance obligations.
If you’re an Australian business looking to operate in the New Zealand market, Alliott NZ in Auckland provides strategic business guidance and practical financial advice on how to structure your business in NZ.
Further reading: Australian Tax Office – advice on GST
* GST is equivalent to Value Added Tax (VAT)
Source Alliott Group