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  • When to charge GST

    You are only required to charge GST on a sale of low value imported goods if it is a taxable sale. This is because:

    • the sale is connected with Australia
    • you are registered or required to be registered for GST
    • the sale is made for payment and is part of conducting your business (or it is treated as being part of your business because you are an electronic distribution platform operator or a re-deliverer)
    • the supply is not GST-free or input taxed.

    As of 1 July 2018, a sale is connected with Australia if the:

    GST does not apply to sales of low value imported goods made to Australian GST-registered businesses who are making the purchase for business use.

    The entity that charges GST on these sales can be the merchant who sells the goods, an electronic distribution platform operator or a re-deliverer. If more than one of these entities is involved in the sale, you will need to work out who charges GST

    Sales of imported goods are connected with Australia under existing rules if the merchant is the importer.

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    Australian GST

    The GST rate in Australia is currently 10%, this means GST is 1/11th of the amount you charge for sales of low value goods imported by consumers will be the GST amount that you must pay. However, if you are a re-deliverer, special rules apply.

    Some sales don’t include GST (for example, GST-free sales, which are known as 'zero-rated' sales in some other countries).

    If you sell low value imported goods to consumers (or you are an EDP operator or re-deliverer that is treated as the supplier for GST purposes), you may need to:

    • register for GST and meet reporting, payment and record-keeping requirements
    • include GST in the price of low value imported goods
    • ensure that correct information is provided to customers and included on customs documents.

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    Exception for multiple goods that total over A$1,000

    The law is designed so that GST is charged only once. If multiple low value goods are grouped together in one consignment, GST can be charged when they are imported instead of when they are sold.

    To apply the exception and not charge GST on a sale, you must reasonably believe that a number of goods will be shipped to Australia as one consignment with a customs value over A$1,000. This means they will be taxed at the border.

    If you sell multiple goods with a total customs value of more than A$1,000 in one transaction:

    • You do not need to charge GST on the sale if it is clear that the goods will be sent to Australia in one consignment (and therefore that GST will be paid at the border).
    • You will need to charge GST on the sale if you are unsure whether the goods will be sent to Australia in one consignment.

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    Example

    Jewellery Co, a United Kingdom company that is registered for GST, sells jewellery that is imported into Australia by consumers.

    Nancy buys two necklaces for A$750 each, including A$50 for shipping to Australia and insurance. Each necklace is a low value good.

    However, under Jewellery Co's standard business processes, it is clear that the necklaces will be shipped in the same package to Australia. Therefore, the necklaces will be shipped in one consignment with a customs value over A$1,000.

    Jewellery Co does not charge GST on the sale to Nancy because it applies the exception.

    If Jewellery Co was unsure whether the necklaces would be shipped in one consignment, it would have charged GST on the sale to Nancy.

    End of example

    Preventing GST from being charged twice

    Measures are in place to prevent double taxation of goods that are imported in a consignment with a customs value over A$1,000. This is to prevent GST being charged twice (charged on the sale of goods and also collected at the border).

    If you are registered for GST and sell low value imported goods (or are treated as the supplier) you must ensure that information is provided on customs documents – for example the self-assessed clearance or import declaration.

    An import declaration is required if goods have a customs value over A$1,000 when they are imported, If the relevant information is provided on the import declaration to show that GST was correctly applied to the sale of low value goods, then GST will not apply at the border.

    We propose that the notification requirements to prevent GST applying at the border will be met when the following information is included on the import declaration:

    • your GST registration number
    • the fact that you charged GST on the sale of the goods.

    You also need to provide a receipt that the consumer could use to show to their customs broker that GST has been charged on the sale.

    If this information is not provided on the import declaration, GST will be charged at the border. In this situation, the customer will have paid GST twice. To fix this, you can reimburse the customer for the GST you charged, if they provide you with a declaration or evidence that they paid GST at the border.

    Once you have reimbursed the customer for the GST you charged, you will not need to pay GST on that sale to the ATO. If you already paid GST to the ATO, you will be entitled to reduce your GST payable in the next return.

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    Situations when GST will still be charged at the border

    If you have incorrectly charged GST on the sale of goods that were not low value goods when sold, GST will still be charged at the border. The customer can seek a refund of GST charged by you in these situations.

    This applies if you charged GST on the sale of goods:

    • that are not low value goods (such as an item with a customs value exceeding A$1,000, tobacco products or alcoholic beverages), or
    • to a recipient who is not a consumer

    When you have reimbursed the customer, if you have already paid the GST to the ATO, you can make an adjustment to reduce the amount of GST payable in your next GST return.

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    Sales before 1 July 2018

    GST will generally apply to sales of goods where the invoice is issued or payment is received on or after 1 July 2018. It will not apply to sales made earlier (unless GST applies under existing rules) even if the goods do not reach Australia until after 1 July 2018.

    Last modified: 13 Mar 2018QC 52553