GST and Australian businesses – imported services, digital products and low value imported goods
If you are an Australian GST-registered business and you import services, digital products or low valued imported goods, you shouldn't be charged GST.
If you are an Australian business but you are not GST-registered, you will need to pay GST on the purchase of these imported services, digital products and low value imported goods.
This page also has information for transporters, customs brokers and Australian-based drop shippers.
On this page
About the law
The Australian tax law ensures that if your business is registered for GST you will be in the same net GST position when purchasing imported services, digital products and low value imported goods as if you purchased them in Australia.
The rules also ensure that overseas suppliers are not unnecessarily drawn into the Australian GST system. When overseas suppliers make sales to Australian GST-registered businesses, the law requires the business purchaser (not the overseas supplier) to determine if GST is payable, and, if so, to pay any GST owing to us using the reverse charge rules.
Information for business purchasers
In this section
Whether GST applies
If you are:
- registered for GST, then GST will not apply to imported services, digital products and low value imported goods that you use in your business in Australia
- not registered for GST, GST will apply to these purchases.
For the supplier not to charge you GST, you will need to both:
- give them your Australian business number (ABN)
- state that you are registered for GST.
If you are purchasing goods only for your personal use, don't provide your ABN or state you are registered for GST. If you do supply this information, you will need to pay the GST to us under the reverse charge.
Penalties can apply if you provide false information to a supplier, such as quoting an ABN when you are not GST-registered.
Paying GST on your purchase (the reverse charge)
You will need to pay GST to us on your purchase if all the following applies:
- You are registered or required to be registered for GST.
- You would not have been entitled to claim a full GST credit if you had been charged GST (such as personal use or input taxed purchases).
- You import services, digital products or low value imported goods.
- The goods are not GST-free.
If the reverse charge applies, the GST payable is 10% of the amount you paid and you claim back any GST credits you are entitled to.
The reverse charge also applies if you provide information such as your ABN and a statement that you are GST registered, if you are buying goods for personal use.
Incorrectly charged GST
You should not be charged GST if you provide your ABN and state you are GST-registered. However, some merchants and EDP operators may not be able to differentiate between business and consumer purchasers at the checkout.
If you are charged GST incorrectly, seek a refund from the supplier by providing your ABN and stating to them that you are registered for GST.
If you are incorrectly charged GST, you will be entitled to claim a GST credit in your BAS if all the following apply:
- You would otherwise be entitled to claim a GST credit.
- you have a valid tax invoice (showing the supplier's ABN)
- the amount you paid is A$82.50 or less.
- The supplier has not reimbursed you for the GST charged on the sale (but if you later receive a reimbursement, you will need to make an adjustment to repay any GST credits you have claimed).
- You have no information to suggest that the GST has been paid to us by the supplier.
GST will be charged at the border when goods are imported with a customs value over A$1,000 (even if the supplier incorrectly charged GST on the sale). You may be able to claim a GST credit for the taxable importation.
See also When you can claim a GST credit. Information about taxable importations is available at GST and imported goods.
If you are a domestic retailer who uses drop shipping
If you are an Australian GST registered supplier and you 'drop ship', you will have to account for GST on your sale of low value imported goods.
Drop shipping refers to sales of goods located overseas at the time of sale and sent directly to your customers in Australia from an overseas source, such as manufacturers, wholesalers, or warehouses.
An EDP operator can agree to be responsible for GST on sales by Australian-based merchants made through its platform if all of the following apply:
- Sales are digital services or digital products made electronically.
- The EDP operator has a written agreement with the merchant before the sale is made.
- The EDP operator is registered for GST.
A supplier is not required to provide a tax invoice for sales of imported services, digital products and low value imported goods.
Overseas businesses registered in our simplified GST system are not given an ABN. Instead, we give them an ATO Reference number (ARN).
Unless a supplier has an ABN, they cannot issue a valid tax invoice to you. Accordingly, if you do not hold a valid tax invoice for the purchase, you may not be entitled to a GST credit.
See also When you can claim a GST credit.
If you are a transporter or customs broker
GST on low value imported goods may impact transporters and customs brokers
In this section
GST and transporters or customers brokers
Transporters of low value imported goods are usually engaged by merchants or electronic distribution platform (EDP) operators to provide delivery of goods to customers in Australia.
As a transporter or custom broker, you:
- will be responsible for including tax information on import documents for the goods
- won't be required to collect GST (unless you're also a supplier for GST purposes).
Reporting and revenue collection at the border
GST on low value imported goods is collected by an electronic distribution platform (EDP) operator, merchant or redeliverer.
Under Customs law, low value goods are still non-taxable importations and will not have GST applied at the border.
Goods imported in a consignment with a customs value of:
- A$1,000 or less do not have customs duty or GST payable at the time of import (this excludes alcoholic beverages and tobacco products)
- over A$1,000
Find out about:
Dealing with suppliers
If you deal with a supplier of low value imported goods for GST purposes and they are registered for GST, ensure their tax information is included on the customs documents.
Your supplier must include information on tax invoices or receipts when they charge GST on sales of low value imported goods. This applies if they are either:
- the operator of an EDP through which the goods are sold
- the merchant who sells the goods
- a redeliverer.
Supplier customs documents
A supplier is responsible for ensuring correct information is included on customs documents.
You may be asked by suppliers to help them to meet this requirement when they give this information to you to include on the customs documents for the supply.
For goods (except for alcoholic beverages and tobacco products) that enter Australia in a consignment with a customs value of A$1,000 or less, you must complete a self-assessed clearance.
Information to include on customs documents
Matching fields on the customs documents
The supplier registration number, which is either:
- a 12-digit ARN
- an 11-digit ABN
This is the vendor ID in the Integrated Cargo System (ICS).
ABN of the purchaser, when given to the supplier
This is the importer ID in the ICS.
Whether GST has been charged on the sale of each of the goods.
This is the PAID exemption code (if GST has been charged by the supplier).
If the supplier doesn't provide this information, you don't need to take extra steps to source it from them. Instead, you enter and clear goods as you normally would.
Example: Transporter role when dealing with an EDP
Phoebe buys a mobile phone with a customs value of A$600 from a merchant in China, through a website called Electronics Marketplace. She gets the mobile phone sent to her aunt in Perth, Australia. Electronics Marketplace is registered for GST.
Electronics Marketplace is an EDP operator, which is responsible for GST on the sale made by the merchant.
Electronics Marketplace charges GST on the sale to Phoebe and pays it to the ATO when lodging its GST return.
Electronics Marketplace requires merchants who sell low value imported goods through its website to pass on relevant information given on its commercial documents through the logistics chain, which can be used to fill out the customs documents.
For this sale, the relevant information is:
- Electronic Marketplace's GST registration number (an ATO reference number or ARN)
- GST was charged on the sale.
The transporter receives this document from the merchant. It completes the clearance declaration on Phoebe's behalf by including Electronic Marketplace's ARN in the vendor ID field and uses the PAID exemption code.
End of example
Example: Transporter role when dealing with a non-resident merchant
Jacob is a consumer who buys a cake decorating kit with a customs value of A$200, from the website of a merchant in New Zealand called Cake Matrix. He gets the kit sent to an address in Melbourne, Australia. Cake Matrix is registered for GST in Australia.
As the goods are low value goods and sold to a consumer, Cake Matrix charges GST on the sale. It pays the GST to the ATO when lodging its GST return.
Cake Matrix gives its GST registration number, which is an ARN, to the transporter and informs them that GST was charged on the sale.
The transporter reports their incoming shipments and completes the clearance declaration on Jacob's behalf. They use the information from Cake Matrix.
In completing the clearance, the transporter includes Cake Matrix's ARN in the vendor ID field and uses the PAID exemption code.
End of example
Example: Transporter role when a purchaser is not a consumer
Davor buys a mobile phone with a customs value of A$800 from a merchant in China, through Electronics Marketplace's website. He gets it sent to his address in Brisbane, Australia.
As he's registered for GST and will use the phone for business, he gives Electronics Marketplace his ABN and states he is GST-registered.
Electronics Marketplace doesn't charge GST on the sale because Davor isn't a consumer.
Electronics Marketplace requires merchants selling low value goods through websites to pass on relevant information on commercial documents through the logistics chain. This information is used to complete the customs documents.
For this sale, the relevant information is:
- Electronic Marketplace's GST registration number (an ARN)
- Davor's ABN
- that GST wasn't charged on the sale.
The transporter receives the document from the merchant and completes the clearance declaration on Davor's behalf.
The transporter includes Electronic Marketplace's ARN in the vendor ID field and Davor's ABN in the importer ID field.
End of example
Find out about Requirements for customs documents.
See also Integrated cargo system (ICS)External Link for more information about ICS requirements
How transporters can prevent GST being charged twice
If documents show that GST has only been charged on some of the goods, you will need to list these goods on separate lines in the Integrated cargo system (ICS).
If a consignment is over A$1,000 and the PAID exemption code has not been included on the import declaration then GST is payable at the border. Purchasers can seek a refund of GST from their supplier if it's been charged twice. They do this by giving the supplier a declaration or evidence that GST was paid at the border.
Examples for completing the import declaration
Example: GST charged on sale of low value goods imported in a consignment over A$1,000
Victoria is a consumer who buys four bridesmaid dresses that each have a customs value of A$300 from Stewart Bridal's online store in the UK. She gets the dresses sent to her address in Alice Springs, Australia.
Stewart Bridal is registered for GST and is the supplier for GST purposes.
Usually, GST is charged on the sale of the four dresses, as they are each low value goods.
An exception can apply if the supplier is sure the goods will be imported in one consignment over A$1,000.
Stewart Bridal couldn't apply the exception as some sizes of the bridesmaid dresses are on backorder, so it is unlikely the four dresses will be consigned together.
As a result, Stewart Bridal charge GST on the sale of the four dresses.
It later turned out that all of the dresses are shipped in one consignment over A$1,000. The customs broker completes an import declaration on Victoria's behalf. They enter the information from the document that Stewart Bridal gave with the consignment. This is the same as the receipt that Stewart Bridal must give Victoria.
On the import declaration, the customs broker:
- puts Stewart Bridal's GST registration number, which is an ARN in the vendor ID field
- includes the GST exemption code PAID for the whole consignment.
As the notification requirements have been met, Victoria doesn't pay GST at the border. Victoria will have to pay any customs duty and clearance charges applicable.
End of example
Information for Australian businesses about paying GST when buying imported services, digital products or low value imported goods.
Example: Mixed sale of low value goods and goods over A$1,000 in a consignment
Jenni bought four bridesmaid dresses that each have a customs value of A$300 (low value goods) and a wedding dress with a customs value of A$1,500.
As in the previous example, Stewart Bridal was unsure if all dresses would be consigned together, so it charged GST on each of the A$300 dresses.
Stewart Bridal won't charge GST on the wedding dress as it's not a low value good and it will have GST applied at the border.
The document given to Jenni shows that GST has been charged on the four bridesmaid dresses and not on the wedding dress.
When the customs broker is completing the import declaration, they ensure:
- the PAID exemption code is entered against the four bridesmaid dresses
- Stewart Bridal's GST registration number is included as the vendor ID.
- no exemption code is listed against the wedding dress – Jenni pays GST at the border for this item.
Jenni will have to pay any customs duty and clearance charges applicable at the border.
End of example