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  • Who charges GST

    Under the new law, you may need to register for, and charge, GST if you are:

    • the merchant who sells the goods
    • an operator of an electronic distribution platform (EDP), such as an online marketplace through which merchants sell goods, or
    • a re-deliverer that helps to bring goods to Australia.

    However, only one entity is required to charge GST on a sale. There is an order of priority as follows:

    • if an EDP operator is responsible for GST on a sale, the merchant will not be responsible for GST
    • if an EDP operator or the merchant is responsible for GST on a sale, a re-deliverer will not be responsible for GST.

    Customs brokers and transporters are also indirectly affected because they provide a service to suppliers who do have to charge GST.

    The responsible supplier (EDP operator, merchant or re-deliverer) is required to include certain tax information on import documents.

    Transporters and customers brokers from the country of export may be asked by the supplier to ensure GST-related tax information is provided to Australian transporters and customs brokers so that import documents are completed correctly.

    On this page:

    Merchants

    We use the term 'merchant' to mean any seller of goods. Merchants that sell goods are responsible for any GST that applies to the sale if you:

    • sell low value goods that are imported by a consumer
    • help getting the goods to Australia (for example, either by sending them yourself or by arranging for someone else to deliver them)
    • do not make the supplies through an EDP operator that is responsible for collecting any GST.

    This applies regardless of whether you are a merchant that is based in Australia or overseas. This means that if you are an Australian business that sells goods that are sourced from outside Australia and imported directly by consumers, you may need to charge GST under the new law.

    If you sell the goods directly (for example, through your own website) and you are registered or required to be registered for GST, you should charge GST on these sales unless they are not subject to GST under Australian law (known as GST-free or input taxed sales).

    The GST on your sale will be 1/11th of the price the consumer pays. If the amount paid includes fees for shipping or insurance, these amounts typically form part of the price of the goods when calculating the GST.

    Example

    Electronics Co is a merchant in China that sells electronics products that are imported by consumers into Australia. It meets the A$75,000 threshold to register for GST in Australia.

    On 1 July 2018, Vishal buys a DVD player from Electronics Co. Electronics Co arranges for the item to be shipped to Australia. On its website, Electronics Co displays a price including GST when it becomes aware that GST will apply.

    Electronics Co charges Vishal A$110. It returns GST of A$10 on the sale to the ATO in its GST return.

    End of example

    How merchants are affected

    If you are a merchant you will need to register for, and pay, Australian GST if your GST turnover is A$75,000 or more in a 12-month period.

    You can find more information on which sales to Australia are counted at When to charge GST.

    Once you're registered for GST you are not required to charge GST on low value imported goods if:

    • your customer is a business who provides you their Australian business number (ABN) and states that they are GST registered
    • you have chosen to apply the exception for multiple goods that total over A$1,000 (these goods will instead have GST applied at the Australian border)
    • GST does not apply to the goods (known as GST-free or input taxed).

    Even if you don’t charge GST because of one of these exceptions, you are still required to include certain information on customs documents if you are registered for GST.

    If you refund a consumer on goods that are returned and you have already paid the GST to the ATO, you can reduce the GST payable in your next GST return.

    See also:

    Merchants selling through an electronic distribution platform

    If you sell low value imported goods to consumers through an electronic distribution platform (EDP), the EDP operator (instead of you) will generally be responsible for GST payable on these sales. If the EDP operator is responsible for GST, these sales do not count towards your GST turnover when deciding if you need to register.

    An EDP is a service that is delivered by electronic communication (such as a website), which allows you to make sales of low value imported goods available to purchasers. An example is an online marketplace.

    A service that only advertises your products (for example, providing a link for customers to buy goods from your website) is not an EDP. You will be responsible for GST on these sales.

    If GST already applies to your sales under existing rules (for example, if you sell goods that are sourced from within Australia), then you will continue to be responsible for GST on these sales, instead of the EDP operator. If your customers are Australian GST-registered businesses then GST will generally not apply to those sales.

    If the EDP operator is responsible for GST, they will need to ensure that their tax information is included on the customs documents when the goods are imported. This means that an EDP operator may ask you to ensure that particular information (such as their GST registration number) is included on these documents.

    While EDP operators will generally be responsible for GST instead of you, we recommend you talk to your EDP operator about how this law will affect you, including:

    • changes to their policies or terms of sale
    • how this may affect your pricing, receipts or business systems
    • how they will differentiate between consumer and business sales
    • how this will affect returned goods and refunds processes
    • how you will need to assist the EDP operator to provide GST information to transporters or customs brokers.

    We also recommend that you check the value of sales you make directly (not through an EDP) to see if you need to register for Australian GST in your own right.

    See also:

    Electronic distribution platform operators

    You operate an electronic distribution platform (EDP) if your service allows merchants to make sales of low value imported goods available to customers, and your service is delivered by electronic communication (for example, an online marketplace). If customers buy low value imported goods from merchants through your website, you operate an EDP.

    However, a service you operate will not be an EDP if it only:

    • provides a carriage service (such as those operated by internet service providers and telecommunication companies)
    • provides access to a payment system or processing payments.

    Services of electronic communication in selling ‘face-value’ vouchers (such as a gift voucher that can be used for a choice of items up to a particular monetary value) by merchants are not an EDP service.

    If you only provide advertising that makes customers aware of products and links them to a merchant's website, you do not operate an EDP.

    Similar rules apply for sales of digital services and digital products. More information is available at 'Electronic distribution platform operators' in GST on imported services and digital products

    See also:

    EDP operator responsible for GST

    If you operate an EDP, you will generally be responsible for GST on a sale made by a merchant through your platform if:

    • you are registered, or required to be registered, for GST
    • it is a sale of low value goods to a consumer
    • either you or the merchant assist in getting the goods to Australia.

    If you are responsible for GST on sales made through your platform, you will need to count these sales (plus any other sales you make that GST applies to) towards your GST turnover. If your GST turnover meets the A$75,000 threshold in a 12-month period, you will need to register and return GST on these sales.

    Broadly, your GST turnover is your gross consumer sales revenue from supplies made in the course of your business that are connected to Australia and to which GST applies. Once you register, you will need to work with your merchants to ensure that certain information is provided to customers and included on customs documents.

    If you are responsible for GST as an EDP operator, the merchant is not responsible for any GST payable on the sale.

    If a customer is provided with a refund for goods that are returned and you have already paid GST to the ATO, you can make an adjustment to reduce the amount of GST payable in your next return.

    See also:

    Example

    Pacific Trends operates an online marketplace that allows consumers to buy goods from merchants.

    Pacific Trends is registered for GST in Australia, as it meets the A$75,000 threshold. It determines that it is responsible for GST on the sales of low value goods made to consumers through its platform.

    Elaine uses Pacific Trends' website to buy a tablet device from Electronics Co, a merchant in China, for A$770 including GST. Electronics Co arranges for the tablet device to be shipped to Australia.

    Pacific Trends is treated as the supplier for GST purposes. It returns GST of A$70 on the sale to the ATO in its GST return.

    As Pacific Trends is treated as the supplier for GST purposes, Electronics Co does not:

    • return GST to the ATO on the sale
    • count the sale when determining if it is required to register.
    End of example

    EDP operator not responsible for GST

    If GST already applies to a merchant's sales under existing rules (for example, because the goods are sourced from within Australia), the merchant will continue to be responsible for GST on these sales, instead of the EDP operator.

    An additional exception applies, under which the merchant (instead of the EDP operator) is responsible for GST if all of the following apply:

    • a document is issued to the recipient that identifies both the supply and the merchant (not the EDP operator) as the supplier of the supply
    • the merchant and the EDP operator have agreed in writing that the merchant is the entity responsible for paying GST for the supply, or for a class of supplies that includes the supply concerned
    • the EDP operator does not control the key elements of the supply, as they don't do any of these    
      • authorise the charge to the recipient for the supply
      • authorise the delivery of the supply
      • directly or indirectly set any of the terms and conditions under which the sale is made.
       

    This exception is only available in limited situations. For example, it could potentially apply if you operate an online classified website where customers can accept offers from merchants on a messaging service, but your only influence on the sale is in restricting the advertising used by merchants on your website.

    There are also rules to ensure that if a sale is made through multiple EDPs, only one EDP operator will be responsible for GST.

    See also:

    Re-deliverers

    A re-deliverer generally provides access to goods that overseas merchants do not normally ship to Australia. They collect, accept delivery of, or purchase overseas goods on behalf of consumers based in Australia.

    You are a re-deliverer if, as part of your business, you assist customers in getting goods to Australia and provide:

    • an offshore mailbox service, where you provide or assist in providing the use of an address outside Australia to which goods are delivered, or
    • a shopping service, where you purchase or assist in purchasing goods outside Australia as the agent of a recipient.

    However, if a merchant or EDP operator also assists in getting the goods to Australia, these entities will be responsible for GST instead of you.

    Transporters are usually not re-deliverers, as they are typically engaged by the merchant or EDP operator, or they do not provide offshore mailbox or shopping services.

    If you buy and resell goods, you are the merchant, rather than a re-deliverer.

    How re-deliverers are affected

    If you are a re-deliverer that is responsible for GST on low value goods sold to consumers in Australia, you will need to count these sales towards your GST turnover. If the value of sales of low value goods to consumers that you help get to Australia (including your service charges which are subject to GST and any other sales you make that GST applies to) is A$75,000 or more in a 12-month period, you need to register for GST.

    When you are registered for GST, you will need to ensure that certain information is provided to customers and included on customs documents.

    As a re-deliverer, you will need to charge GST if, broadly:

    • you are registered or required to be registered for GST
    • the goods are low value goods sold to consumers
    • you assist in getting the goods to Australia (and the supplier or an electronic distribution platform operator do not assist in getting the goods to Australia).

    If a consumer is refunded on goods that are returned, you should refund any GST you collected on the goods. If you do this and you have already paid the GST to the ATO, you can reduce the GST payable in your next GST return.

    You are not required to charge GST on low value imported goods under the new law if:

    • your customer is a business who provides you their Australian business number (ABN) and states that they are GST registered
    • you apply an exception for multiple goods that total over A$1,000 because they will be shipped together in one consignment to Australia
    • GST does not apply to the goods (known as GST-free or input taxed supplies).

    Even if you don’t charge GST because of one of these exceptions, you are still required to include certain information on customs documents.

    See also:

    Special rules for re-deliverers calculating GST

    If you are a re-deliverer, the GST you charge will be:

    • 10% of the amount paid by the customer for the goods, plus
    • 1/11th of the amount the customer pays for your services to get the goods to Australia. As a re-deliverer, GST applies to all of your services, including international transport services and insurance for the transport of the goods.

    Example

    Jia wants to purchase a coat for the equivalent of A$200 from Clancy's, a store in the United States. Clancy's does not ship its products to Australia.

    Jia contacts Take-it-Home Co to help her bring the coat to Australia. Take-it-Home Co provides her with an address in the United States. Jia buys the coat from Clancy's, which ships the coat to this United States address. Take-it-Home Co then arranges for the coat to be shipped to Australia.

    Take-it-Home Co is registered for GST and charges Jia A$44, including A$4 GST, for the services it provided to bring the goods to Australia. It also charges Jia A$20 in GST on the coat, which is 10% of the amount Jia paid to Clancy's. Take-it-Home Co returns A$24 in GST to the ATO.

    End of example

    See also:

    Domestic retailers who use drop shipping

    Australian GST-registered suppliers including Australian retailers who 'drop ship' may now have to account for GST on these goods.

    Drop shipping in this context refers to sales of goods that are located overseas at the time of sale and sent directly to consumers in Australia from an overseas source (such as manufacturers, wholesalers, or warehouses).

    Last modified: 29 Nov 2018QC 52554