GST on low value imported goods

From 1 July 2018, goods with a customs value of AUD1000 or less (low value goods) may attract the Goods and Services Tax (GST) at the point of sale if imported from overseas by consumers in Australia.

There will be no changes to:

  • the AUD1000 threshold for reporting and collection of duties and taxes at the border
  • border clearance processes
  • the flow of goods across borders
  • current import requirements for tobacco, tobacco products or alcoholic beverages.

Businesses with sales (subject to Australian GST) of AUD75000 or more to consumers in Australia within a 12 month period, will need to register with the Australian Taxation Office (ATO), collect GST at the point of sale and remit that GST to the ATO.

This includes businesses that are:

  • merchants who sell goods to consumers
  • electronic distribution platform operators
  • re-deliverers

There are rules that determine which businesses will need to register for, and charge GST. Further information on GST registration for non-residents of Australia is available from the ATO website.

The ATO is communicating, educating and assisting affected businesses to comply with the measure and ensuring specific information is available for transporters and customs brokers; consumers; and businesses all of which may be impacted by these changes.

Further information about GST on low value goods is available on the ATO website and also available in Chinese.

Changes to the ICS

Businesses that are registered for GST and sell low value goods to consumers in Australia, are required to provide all relevant information on import documents, e.g. import declarations or self-assessed clearance documents.

To support the ATO and facilitate the movement of low value goods across the border, changes have been made to the Integrated Cargo System (ICS) (see also Home Affairs Notice 2018/13) to collect additional information, including:

  • Vendor ID – the GST registration number (ARN) or ABN of the business selling the goods.
  • Importer ID – the ABN of the purchasing business to identify goods imported by a business for use in their business in Australia.
  • GST-paid exemption code, where applicable, to identify when GST has been paid on a low value good at the point of sale.

Providing this information will also help prevent double taxation at the border.

Businesses who are suppliers for GST purposes as well as transporters/customs brokers may need to prepare business systems and processes for the changes to the ICS before 1 July 2018.

See also External Release Notes 17.04.02.

GST-paid exemption code

The GST-paid exemption code is for use in specific circumstances to help prevent double taxation (see Home Affairs Notice 2018/14).

  • Goods imported in a consignment of AUD1000 or less will not require the use of the GST-paid exemption code.
  • It should not be used on imports of tobacco, tobacco products or alcoholic beverages.
  • It should not be used for goods with a value over AUD1000.
  • Existing GST exemption codes should continue to be used, where applicable, for goods that are GST exempt

GST refunds

Importers should receive invoices or receipts from the vendor as evidence that GST has been paid at the point of sale.

However, if GST is paid at the point of sale and then at the border, the importer will need to seek a refund of the GST from the vendor. Refunds of GST will not be available from the Department of Home Affairs (see Home Affairs Notice 2018/15).

Inquiry into collection models for GST on low value imported goods

As part of the Act which legislated for the collection of GST on low value imported goods from 1 July 2018, the Australian Government asked the Productivity Commission to undertake a four month inquiry into models for collecting GST on low value imported goods.

The final Inquiry Report was handed to the Australian Government on 31 October 2017, then tabled in Parliament and publicly released on 9 November 2017.

The main finding of the inquiry, is that the legislated model—the vendor collection model—is the most feasible among the alternatives at this time.

Low Value Import Threshold Taskforce

The changes to the GST law to apply to overseas sales of low value goods to consumers in Australia, were based on prior analysis of the retail industry. On 4 November 2011, the Productivity Commission released its Final Report on the Economic Structure and Performance of the Australian Retail Industry.

  • Recommendation 7.1 stated that, in principle, the low value threshold exemption for GST and duty on imported goods should be lowered to promote tax neutrality with domestic sales. However, the Government should not proceed to lower the threshold until it is cost effective to do so.
  • Recommendation 7.2 of the report stated: 'The Government should establish a taskforce charged with investigating new approaches to the processing of low value imported parcels, particularly those in the international mail stream, and recommending a new process which would deliver significant improvement and efficiencies in handling.'

In response to Recommendation 7.2, the taskforce was established comprising an independent expert panel.  The taskforce released its Final Report on 6 September 2012, and on 3 December 2012, the Government's interim response was released.