Australian Taxation Office Introduces New Tax Measure for International Merchants

Australian Goods and Services Tax (GST) will apply to international businesses that sell low value goods to consumers in Australia
Australian Taxation Office
2017-07-17 22:00 2275

CANBERRA, Australia, July 17, 2017 /PRNewswire/ -- From 1 July 2018, Australia requires businesses that sell goods into Australia to charge goods and services tax (GST) on goods valued at A$1,000 or less. This includes goods sold by merchants, on-line marketplaces and for those supplied via re-deliverers.

Businesses that sell more than A$75,000 of these low value goods per year to consumers in Australia will need to register with the Australian Taxation Office (ATO) and charge GST on these sales.

Those that sell less than A$75,000 worth of taxable supplies (including low value goods) to consumers in Australia per year will not be affected. There will be no requirement to charge GST on goods valued above A$1,000 as they will be subject to existing border tax, duty and import clearance processes.

This change will ensure that low value goods imported by consumers will have the same tax treatment as goods that are sourced from within Australia. It will mean a more level playing field between local businesses and their global competition, since domestic suppliers are already required to charge GST, regardless of the value of the product.

Australian online shopping habits have been steadily increasing over the last few years with overseas retailers reaping the rewards. This trend is set to continue, representing an even bigger opportunity for those retailers who continue to build brand loyalty and recognition in the Australian market. The NAB Online Retail Sales Index estimated that Australians spent $22 billion on online retail in the year to March 2017, a nine percent increase on the previous year.

"Many suppliers now transact across the globe and it is often no more difficult for Australian residents to purchase physical goods from a foreign supplier than from a local supplier," said Kate Roff, Assistant Commissioner at the ATO.

"It has become very common for Australian consumers to purchase a wide range of products like clothing, electronics and other goods from online retailers. The new law will require overseas business, including on-line marketplaces and re-deliverers to apply GST to these products, resulting in a more even tax treatment for all goods" concluded Roff.

Overseas businesses do not have to register if they only make business to business sales. Those that are registered will not have to charge GST on their business sales if the purchaser provides their Australian Business Number (ABN) and notification of their GST registration.

This measure adds to other Australian GST changes being implemented on July 1 2017, that require businesses that sell imported services or digital products to Australian resident consumers to register for GST and apply it to sales made to Australian consumers. This includes architectural or legal services, and the streaming or downloading of movies, music, apps, games, e-books, gambling and online dating services.

You can find more information about the Australian GST by:

Media Contact:

Nick Timms
d: +61-2-9928-1519 
m: +61-431-214-852

Source: Australian Taxation Office