GST coming for your online cart – Australia’s proposed tax changes to low-value imports




Written by Geoff Mann, Partner & Elke Bremner, Senior Associate – Ashurst*

Stock up on your Nike running shoes, your Kate Spade handbags and your Stephen King novels now as, come 1 July 2018, you may be paying an additional 10%.

As part of the 2016/17 Federal Budget the Treasurer, The Hon Scott Morrison, announced that the Goods and Services Tax (GST) will be extended to low-value goods imported by consumers. The announcement followed the Government's 2015/16 Federal Budget measure of broadening the GST base to impose GST on acquisitions of intangible supplies and digital products where the recipient of the supply is an Australian-based consumer.  

Under the current law, no GST is payable on the purchase of goods from a non-resident online retailer unless the value of those goods exceeds A$1,000. Where the value exceeds A$1,000, the customer will be required to pay the GST on the purchase to the Australian Border Force before the package will be released for delivery. Under the new provisions, any supply of goods from a non-resident supplier to an Australian consumer, regardless of the value, will be taken to be a taxable supply and subject to GST.

Where the provisions apply, it will be the supplier (or deemed supplier) who will be liable to remit GST to the Australian Taxation Office (ATO). Operators of electronic distribution platforms (EDPs), such as eBay, and re-deliverers can also be deemed to be the supplier. To address the potential for double taxation, where the supplier (or deemed supplier) reasonably believes that GST will apply to the supply under the current A$1,000 taxable importation rules, no GST will be payable by them.

The Government has estimated that the new provisions will raise approximately A$300m in revenue over the next four years.[1] However, there are a number of question marks over how the ATO will be able to enforce compliance by non-resident online retailers with no physical presence in Australia. What is clear, however, is that the implementation of the new measure is causing significant difficulties and practical complexities among the big foreign players in the market. eBay has even threatened to cease engaging with Australian customers if the measures become law.[2]

A deferred start date of 1 July 2018 has been agreed to allow non-resident online retailers more time to prepare for the changes. The Productivity Commission has also been asked to review the proposed vendor collection model to ensure that this really is the most efficient way of collecting the GST.[3] The Productivity Commission reported its findings to the Government on 31 October 2017[4].

You can read the full version of this white paper at www.lexisnexis.com.au/GST2018

*This post is sponsored content from LexisNexis, and written by Geoff Mann, Partner, and Elke Bremner, Senior Associate, Ashurst.



[1] Federal Budget 2016-17, Budget Measures Budget Paper No. 2 2016-17, Revenue Measures, 19.
[2] eBay's submission to the Australian Senate’s Inquiry into the Treasury Laws Amendment (GST Low Value Goods) Bill 2017, 10 April 2017.
[3] See section 177-20(1) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
[4] See section 177-20(2)(c) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth). 

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