Taxing of low value goods imported into Australia

Taxing of low value goods imported into Australia

Kate Law, Indirect Tax Specialist, discusses draft Government legislation that will amend the GST on low value goods.

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National Leader, Indirect Tax Compliance

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The Federal Government is currently consulting on exposure draft legislation that will amend the goods and services tax (GST) law to give effect to the 2016-17 Budget decision to apply GST to low value goods imported by consumers.

While the taxing of low value goods is not popular with the average Australian consumer, it is hard to argue with the policy behind it (in creating a level playing field with goods that are sourced domestically). However, complexity arises because goods imported with a value of over $1,000 will still be taxed at the border (unless they qualify for an exemption such as for GST-free goods).

From 1 July 2017, overseas vendors, electronic distribution platforms and goods forwarders will have to account for GST on sales of low value goods to consumers in Australia if they have a GST turnover of $75,000 or more.

Where a transaction is over $1,000 and contains one or more low value goods, suppliers will have to determine whether to allow the goods (being a single consignment) to be taxed upon importation into Australia or disaggregate the transaction and tax the low value goods in which case the customer will still pay import GST on any goods over $1,000 at the border. To avoid paying GST on the customs value of the importation, the customer will have to provide proof that GST was already paid on the low value goods.

There are issues to be resolved to reduce the complexity of the draft legislation but just as for intangible supplies, non-resident suppliers (and Australian businesses who use offshore supply chains) will need to prepare for implementation.

The consultation period for Treasury Laws Amendment (2017 Measures No. 1) Bill 2017 ends 2 December. KPMG will be making a submission and we would be happy to consider including specific points that you may have.

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