Online shopping in Australia is about to become more expensive

Online shopping in Australia is about to become more expensive

The Australian government has announced that from July 1, 2018, clothing, electronics and furniture (and other online shopping) purchased from overseas retailers with a value of under AU$1,000 will also incur a 10 per cent GST.

Up until now goods bought online in Australia from foreign retailers were exempt from GST if the total order value was less than AU$1,000. Often, this made it substantially cheaper to purchase products from overseas, rather than Australian retailers—whether online or bricks-and-mortar. In a bid to even the playing field for local retailers, GST, or the “protectionist tariff,” will be rolled out to all carts.

Things you buy over the internet will have the same rules, duties and screening processes applied as any other import.

You need to know that:

  • For goods with a value of AUD1000 or less, there are no duties, taxes or charges to pay at the border.
    • From 1 July 2018, the Goods and Services Tax (GST) may apply to low value goods when imported from overseas by consumers in Australia. However, the GST will be charged at the point of sale and not at the border.
  • For goods with a value over AUD1000, you will need to fill out an Import Declaration, and pay duties, taxes and charges at the border.
  • You will need to pay duties and taxes on some goods (like tobacco or alcohol) regardless of their value
  • Certain types of goods are not allowed to be brought into Australia, or else need special permits.

In summary, the reforms:

  • make supplies of goods valued at A$1,000 or less at the time of supply connected with Australia if the goods are purchased by consumers and are brought into Australia with the assistance of the supplier
  • treat the operator of an electronic distribution platform (EDP) as the supplier of low value goods if the goods are purchased through the platform by consumers and brought into Australia with the assistance of either the supplier or the operator
  • treat re-deliverers as the suppliers of low value goods if the goods are delivered outside of Australia as part of the supply, and the re-deliverer assists with their delivery into Australia as part of a shopping or mailbox service that it provides under an arrangement with the consumer
  • allow non-resident suppliers of low value goods that are connected with Australia to elect to access the simplified registration and reporting system
  • prevent double taxation.

The catch?

“The new online shopping tax will only be collected from self-declaring overseas retailers with turnovers of more than $75,000 and the Australian Tax Office has no power to punish those beyond the ATO’s jurisdiction,” reports The Sydney Morning Herald. “The tax is designed with the near impossibility of its collection in mind,” RMIT economist Christopher Berg told the newspaper. He added that the most the ATO could do to non-compliant businesses was to slow down the processing of packages at the Australian border.

It remains to be seen which overseas retailers charge, collect and remit the new online shopping tariff but we’re predicting that most of the bigger businesses will comply, given their success in the Australian market. If this means no longer shopping tax-free, let’s then hope our local retailers benefit in the process.

We offer a free 15 minute consultation to anyone who wants to talk about this issue.  After dealing with the ATO for so many years, and after earning a track record of success, we would be happy to share our experience.

Adam Ahmed is an Australian international tax lawyer. Adam has over a decade of experience working at 3 of the big 4 accounting firms and one of the top tax law firms in Australia. He is currently the managing director of Adam Ahmed & Co.

Online shopping in Australia is about to become more expensive