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GST on Low-Value Imported Goods Effective from 1 July 2018 (incl. FAQs)

Monday June 4th, 2018

As of 1 July 2018, overseas businesses are facing major taxation changes for low-value goods exported to Australia.

Overseas B2C companies who meet the above >AUD 75,000 per annum threshold are required to:

  • Register with the Australian Taxation Office (ATO)
  • Charge and collect GST on sales of low-value goods to Australian consumers
  • Lodge GST returns to the ATO periodically

The changes only apply to shipments considered as low-value (worth less than AUD 1,000). These shipments have been exempt from GST so far.

For shipments worth more than AUD 1,000 as well as tobacco products and alcoholic beverages, GST, customs duty and any clearance charges will still be charged at the border according to current processes.

The C.T. Freight team has been and will be in contact with all customers impacted by these customs changes. In addition, please find below our informative FAQs about the tax changes. If you have any further questions in regards to your business, please contact your C.T. Freight service person.

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Frequently Asked Questions on Australia Low-Value Threshold for Goods Entering the Country
The answers to the below questions have been kindly provided by the C.T. Express Team.

Q1. Can you explain the changes to Australia’s low-value threshold for goods entering the country?
A1. From 1 July 2018, there will be changes to the low-value threshold, reducing it to AUD 0.00 for goods sent directly to consumers from businesses that meet specific criteria. Currently, all* goods from overseas valued at AUD 1,000 or under are exempt from GST.
*excludes alcohol & tobacco products

Q2. How may this change affect my business if I am exporting to Australia?
A2. Businesses that generate more than AUD 75,000 in business to consumer (B2C) gross sales revenue per annum from Australia will need to register for GST and charge this at the point of sale. Customers may include online shopping platforms, independent merchants, and mailbox re-delivery service providers.

Q3.Will this delay my shipments?
A3. C.T. Freight does not foresee any changes nor delays in the clearance processing times of shipments. However, this situation will be monitored closely by C.T. Freight on implementation and customers will be informed immediately if there is any expected impact.

Q4. How will the shipper be identified as an importer over the threshold?
A4. The shipper/supplier must identify themselves and by registering for an ABN or ACR they volunteer/disclose that they are over the AUD 75,000.

Q5. What will my business have to do in order to comply?
A5. Businesses that meet the AUD 75,000 B2C threshold are required to:

  1. Register with the Australian Taxation Office (ATO) here:
    https://www.ato.gov.au/Business/International-tax-for-business/In-detail/Doing-business-in- Australia/Australian-GST-registration-for-non-residents
    Once registered, businesses will receive an ATO Reference Number (ARN).
  2. Charge and collect GST on sales of low-value goods to Australian consumers.
  3. Provide C.T. Freight with the business’ ARN when shipping goods to Australian consumers.
  4. Lodge GST returns to the ATO periodically.

Q6. What will happen to shipments from a shipper with importer value over AUD 75,000 who does not have an ABN or ARN?
A6. The ATO have access to a number of information sources and they will move from querying to more intensive action which may include:

  1. Involuntary GST registration and default assessments
  2. Imposing penalties
  3. They have international collaboration
  4. Activate international treaties for the exchange of information and debt collection
  5. Interception of funds

Q7. Can you as our broker pay and we can bill back to the shipper like DDP?
A7. The Broker is not involved at all with low-value GST payments to the ATO. For shipments under the

Q8. When will these new rules come into effect?
A8. The legislation has been passed with a go-live date of 1 July 2018.

Q9.Why is this taking place?
A9. The majority of GST paid in business to business (B2B) transactions is claimed back when goods are on-sold to the end consumer. This legislation is aimed at products sent to consumers and bought directly from international retailers.

Q10. Does this apply to all shipments with a value of less than AUD 1,000?
A10. No, under the current model there will be no changes to GST on goods delivered for business purposes to business addresses (B2B businesses).
The legislated model abolishes the AUD 1,000 GST‐free threshold for goods delivered directly to consumers (B2C businesses), and only when they originate from companies with a turnover of more than AUD 75,000 in a 12‐month period.

Q11. How to provide an ARN/ABN to C.T. Freight Pty Ltd for businesses shipping to Australian B2C receivers?
A11. Businesses that are shipping to Australian B2C receivers will be required to follow the below procedures in order to comply with this regulation:

  1. Register with the Australian Taxation Office (ATO) for a 12-digit ATO Registration Number (ARN).
  2. When shipping goods to Australian B2C receivers, the business will need to enter either their 12-digit ARN number or their 11-digit ABN number into the ABN/ARN (VENDOR FIELDS).
  3. Lodge GST returns to the ATO periodically.

 

For more information on the changes, exemptions and how businesses can register for an ARN (ATO Reference Number), please visit the ATO website: https://www.ato.gov.au/Business/International-tax-for-business/GST-on-low-value-imported-goods/