For GST luxury car tax and wine equalisation tax purposes, from 1 July 2015, where the term ‘Australia’ is used in this document, it is referring to the ‘indirect tax zone’ as defined in subsection 195-1 of the A New Tax System (Goods and Services Tax) Act 1999External Link (GST Act).
If you run an enterprise that imports or exports goods or services in Australia then there are a few things you should know about your GST obligations. Our compliance activities tell us that most errors are made by small to medium businesses.
- incorrectly accounting for the on-sale of imported goods
- GST liability for installing and assembling imported goods
- incorrectly classifying exports
- non-residents and non-deductible expenses
- making a voluntary disclosure if you have made an error.
GST is payable on most goods imported into Australia. If the goods are subject to GST on importation, you are required to pay GST to the Department of Home Affairs before the goods are released. This is unless you are part of the deferred GST scheme.
We have identified GST-registered taxpayers that have not accounted for the on-sale of imported goods on their business activity statement (BAS).
When imported goods are on-sold, you are required to report the sale and account for the GST even if you have paid GST on the importation. The on-sale is to be reported on your BAS and GST is payable, unless the supply is GST-free or input taxed.
If you are registered for GST and import the goods for a creditable business purpose, you can claim an input tax credit for the creditable importation.
There may be instances where an overseas business will incorrectly charge GST on importations where they install or assemble goods.
A supply of goods to an Australian business where the supplier installs or assembles the goods in Australia, but does not import the goods into Australia, is not connected with Australia for non-resident suppliers. Therefore, the non-resident supplier will not be subject to GST on these transactions.
- GST treatment of cross-border transactions between businesses
- International taxation of goods and services supplied to Australia
Incorrect reporting of warehoused goods by overseas suppliers
Goods that are imported and then warehoused in Australia for later sale to Australian consumers are connected with Australia and subject to GST, unless they are sales of goods classified as GST-free.
Typically this occurs when a non-resident business imports goods to Australia and has them warehoused by a third party logistics provider in Australia for sale at a later date. The non-resident business sells the product to an Australian consumer through their websites, electronic distribution platforms or third parties. The goods are then delivered to the consumer from the warehouse within Australia.
Where goods are on sold and are taxable supplies, the GST is required to be included in the sale price and paid to us. A GST shortfall occurs when GST is not charged by the non-resident supplier to the consumer when they are required to be registered for GST.
If you are a non-resident business who supplies goods already warehoused in Australia, you need to consider whether you have GST obligations and entitlements.
In these circumstances you need to:
- determine if you are required to register for GST
- determine the type of registration that best suits you.
If you register for GST or are required to be registered you also need to
- include GST in the price you charge for supplies that are subject to GST
- determine if you are eligible to claim GST credits
- report and pay GST amounts to us.
We’re here to support you, however, we expect you to take reasonable steps to meet your GST obligations. If you still find that you need assistance please contact us on 13 28 66 from 8.00am and 6.00pm Monday to Friday.
Find out about:
- Incorrect reporting of warehoused goods by overseas suppliers – Chinese Simplified
- Incorrect reporting of warehoused goods by overseas suppliers – Chinese Traditional
- Incorrect reporting of warehoused goods by overseas suppliers – Korean
- Sales Connected with Australia
- Who should register for GST
- Australian GST registration for non-residents
It is important to understand how goods are exported out of Australia and the international commercial (Inco) delivery terms that apply. Taxpayers may believe themselves to be the exporter. However, when the terms of delivery are analysed, this is not the case. A change to your Inco delivery terms (for example, delivered duty paid to ex-works) in an agreement can alter your circumstances. This could potentially lead to you no longer being considered the exporter and GST becoming payable on the supply.
- GSTR 2002/6 Goods and Services Tax: Exports of goods, items 1 to 4A of the table in subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999. This ruling will assist suppliers in analysing if they are an exporter and if their supply is a GST-free export.
If you are a non-resident business registered for GST in Australia under the full GST registration system, you should be aware that registered businesses are not entitled to claim GST credits on certain purchases. Under the GST law you cannot claim a GST credit for expenses that are non-deductible for income tax purposes. Examples of non-deductible expenses include:
- purchases of a private nature
- entertainment provided to employees
- entertainment expenses.
If you are a registered for fringe benefits tax your position may be different.
- GSTR 2001/3 Goods and Services Tax: GST and how it applies to supplies of fringe benefits
After reviewing your international cross border transactions you may discover mistakes in your reported GST amounts. If this occurs, we encourage you to make a voluntary disclosure. Reduced penalties will apply if you voluntarily disclose errors before we conduct any compliance activity.
Next step:This fact sheet outlines some examples of common errors made by businesses who import or export goods and services in Australia.