Taxable supplies and low value imported goods
Sales of goods that are to be imported into Australia that have a customs value at or below $1,000 can be non-taxable importations (see item 26).
However, the supply of low value goods into Australia can be a taxable supply if the supply is connected with Australia.
Supplies of imported goods
If you are the supplier of imported goods, your supply will be connected with Australia if one or more of the following applies:
- You import the goods.
- You install or assemble the goods in Australia.
- Your agreement to sell the goods occurs after the goods have been imported.
- You have purchased the goods that you are selling from the importer of those goods and on-sell the goods within Australia.
The following example looks at imported goods supplied under a trial period, where it is a non-taxable importation but it is likely to be a taxable supply.
Hot Gadgets, an Australian supplier registered for GST, offers a new 'Magic Sweeper' at an introductory price of $259 through its call centre.
Hot Gadgets are offering customers a 30 day trial period to try the magic sweeper before purchase. Under the terms and conditions the prospective customer is under no obligation to purchase the sweeper until the 30 day trial period has expired. If the sweeper is returned before the end of the trial period, no payment is required.
Hot Gadget's factory and warehouse are based in Hong Kong and all orders are processed and posted directly to prospective customers from overseas. The goods have a value of less than $1,000 and; therefore, will be a non-taxable importation unless ordered in bulk.
At the end of the 30 day trial period, if the goods have not been returned, Hot Gadget's customer has then purchased the goods and Hot Gadgets will charge the customer's credit card.
The purchase of the goods has occurred after the goods were imported; therefore the supply is connected with Australia. Hot Gadgets makes a taxable supply if all the other elements of the taxable supply rules are met.
End of example
If the customer pays at the time of order then this will indicate that the supply has been committed to at the time of making the order. This would not be a trial period arrangement even if the customer is entitled to return the goods within 30 days.
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Importers of low value goods
You are the importer of low value goods if both of the following apply:
- You have caused the goods to be brought to Australia for your own purposes.
- You or your agent have completed the customs formalities or would be responsible for the customs formalities.
Generally you will be regarded as the importer of goods when you order goods either via a website, phone, or in-store from an Australian retailer; you accept the retailer's terms and conditions to be responsible for any customs formalities; and the goods are sent from overseas to you in Australia.
You have caused goods to be brought to Australia if the goods were brought to Australia for application to your own purposes after importation.
You use goods for your own purposes if you sell, lease or hire the goods, use the goods as trading stock or use the goods in the manner consistent with their design or nature.
The following example looks at low value goods imported by customer that are a non-taxable importation and not a taxable supply.
Cameras Galore advertises the latest digital cameras on its website.
Zac places an order and pays for a new digital camera worth $600.
Cameras Galore terms and conditions advise that the camera will be shipped from Singapore and Zac will be responsible for any taxes and customs formalities in his home country.
Zac accepts the terms and conditions, and agrees for the camera to be sent by international post to his home in Sydney.
As the customs value of the camera is under the low value import threshold, the import of the camera will be a non-taxable importation.
ACBPS release the goods to Zac who is the addressee of the international postal package. As such, Zac is the importer of the camera. Cameras Galore does not make a supply connected with Australia and; therefore, does not make a taxable supply.
End of example
If goods are sent to Australia by international post, the addressee on the low value goods will generally be the entity that ACBPS is authorised to release those goods to. In this instance, the addressee will be the entity who would complete the customs formalities or be responsible for doing so.
If low value goods are sent to Australia by air or sea cargo arrangements, the goods would generally be released to the ultimate consignee. A freight forwarder or logistics company would not normally be the ultimate consignee. The ultimate consignee would normally be the purchaser unless the seller nominates themselves as the ultimate consignee. In this instance, the ultimate consignee will be the entity who has completed the customs formalities or would be responsible for doing so.