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  • GST changes for Australian retailers who use drop shipping

    From 1 July 2018, GST will apply to sales of low value imported goods (valued at A$1,000 or less) to consumers in Australia.

    These GST changes will also affect Australian GST-registered suppliers including Australian retailers who 'drop ship'.

    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 (for example, manufacturer, wholesaler or warehouse).

    Currently these transactions do not incur GST. However, from 1 July 2018, Australian retailers should treat these sales the same as other domestic sales, and apply GST at the point of sale.

    These changes will ensure goods sourced domestically and from offshore receive the same GST treatment when sold to consumers in Australia.

    Imported goods valued above $A1,000, as well as all tobacco products and alcoholic beverages, will continue to have GST applied at the Australian border as per current arrangements.

    Any Australian suppliers not registered for GST, will need to include drop shipping sales when determining if they are required to register. If your GST turnover is A$75,000 or more in a 12-month period, you are required to register for GST.

    Example

    Stellar Fashion, a major online Australian-based GST-registered retailer, makes a sale to a consumer in Australia (after 1 July 2018) for a dress valued at $A100. The dress ships directly to the consumer by sea cargo from the company's offshore supplier based in the Philippines. Stellar Fashion treats the sale the same as a domestic sale and remits 1/11th of the sale price to the ATO. They account for this on their business activity statement.

    End of example

    Legislation and supporting material

    Following consultation, we recently published the updated Law Companion Guideline LCR 2018/1 GST on low value imported goods.

    See also:

      Last modified: 16 Mar 2018QC 54798