From 1 July 2018, your online shopping may cost you 10% more. Scott Morrison’s 2017 budget measures are now coming in to force, making overseas traders subject to GST – where they turnover $75,000 or more. Previously, ‘low value goods’ under $1,000 were not subject to GST. The change in legislation will mean EDP’s (electronic distribution platforms) like eBay will be deemed to be the supplier of goods, and therefore have to charge GST on low value goods.
The new laws aim to remove a tax advantage to foreign businesses and level the playing field for small businesses. The government expects the changes to boost revenue by $300 million over three years.
Recently, Amazon announced it will block access to its US website for Australians, and eBay is also threatening to do the same. Surely this will limit Australian consumers choice in the market.
Summary of the changes
From 1 July 2018, a supply of goods from a non-resident to an Australian consumer, regardless of the value of the good, will be a ‘taxable supply’ for the purposes of GST. If imported goods are subject to GST, the supplier will be liable to remit GST to the Australian Tax Office. Similar to domestic laws, foreign vendors exporting low-value goods (i.e. valued at less than $1000) to Australia will only need to comply with the GST regime if they have a local turnover of more than $75,000 in a 12 month period.
Operators of electronic distribution platforms (EDPs) and re-deliverers can be deemed to be the supplier if certain criteria are met:
- An EDP will be the deemed supplier if the low-value goods are purchased through the platform by consumers, and brought into Australia with the assistance of the supplier or operator. An example of an EDP is eBay.
- A re-deliverer will be the deemed supplier if the goods are delivered outside of Australia as part of the supply, and the re-deliverer assists with the delivery into Australia as part of a shopping or mailbox service that it provides under arrangement with the customer. An example of a re-delivery service is US to Oz.
GST will not be changed on low-value goods under the new laws if:
- the customer is an Australian business that provides their ABN and states to the supplier that they are GST registered;
- multiple goods of more than $1,000 value will be shipped together in one consignment to Australia (GST may apply to this transaction but under different provisions); or
- the goods are GST-free or input taxed supplies (e.g. some medical aids and appliances are GST free).
There are a number of potential problems that may arise:
- inconsistent treatment of foreign vendors compared with domestic vendors
- exposes Australians to potential double taxation
- foreign vendors that simply do not register – how can the ATO track this
Overall, expect to pay more for these goods as the GST will be passed on to consumers.