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GST on low value imported goods: only simple in theory

GST on low value imported goods - theory

Kate Law and Anna Derlacz discuss key issues regarding the new rules on GST on low value imported goods.

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There are only four months to go until Australia becomes a ‘first mover’ globally by requiring sellers, online platforms and redeliverers to remit goods and services tax (GST) on sales of low value imported goods to Australian end consumers.

Businesses selling goods into Australia will need to navigate a two tier system whereby low value goods will be taxed at sale and high value goods or consignments over AUD $1,000 will be taxed at the border.

KPMG has prepared a brief outlining the key issues and FAQs for these rules.

Businesses will need to consider how they manage a number of practical complexities, including:

  • Identifying ship from location for goods sold through online platforms, as the GST liability for goods shipped from offshore will rest with the online platform, but the GST liability for goods shipped from Australia will remain with the seller. 
  • Classifying goods and customers, to correctly identify whether low value imported goods qualify for GST-free treatment and whether a sale is business to consumer (B2C) (generally taxable) or business to business (B2B) (not taxable), and that sufficient evidence is collected and retained to support the treatment adopted. 
  • Returns and refunds, particularly in tripartite arrangements where a good may be returned to the seller but the GST refund entitlement arises for the online platform through which the good was sold. There is some conjecture as to whether the platform will be entitled to a GST refund from the Australian Taxation Office (ATO) if it refunds the supplier rather than the customer directly.
  • Pricing at checkout, including how GST payable is disclosed (on a total or per product basis), the impact of discounts, the requirements to issue a notice of the GST payable, and the impact of consumer protection laws. 
  • System upgrades, to ensure any investment in systems upgrades is scalable, with many other countries planning to adopt a similar model in the near future.
     

© 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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