Effective 1st July 2018, Australian shoppers and overseas retailers initiate changes as the $1000 GST free threshold on low-value imported goods are being removed. Overseas retailers who sell more than $75,000 in goods annually in Australia will be required to collect GST at the point of sale. To date, overseas online orders such as tyres and lower value bike parts saved on GST as well as customs duty and administration costs. The changes mean that you still don’t have the customs duty and administration costs on these low-value imports, but now have the 10% tax which will be collected directly by the retailer.
This modification means Australian based retailers that are involved in drop-ship goods will need to charge GST from 1 July. However, clients who purchase low value imported goods should not be charged GST if they:
• Import the low-value goods for commercial use in Australia
• Are registered for GST
• Provide their Australian business number (ABN) to the supplier, along with a statement declaring they are registered for GST.
If your clients are inappropriately charged GST, they should seek a refund from the supplier. In some cases, they may be entitled to claim a GST credit instead. Remind your clients that when claiming a GST credit, they should have a valid tax invoice. Only receipts that contain an ABN are valid tax invoices – even if they apply GST. Some overseas suppliers may be registered in the simplified GST system and have an Australian Taxation Office reference number (ARN) instead of an ABN.
Many consumers perceive this as another move by Australian business and politics to increase prices and penalize them in the name of Tax. When retailers started gaining traction in their moves to sway the government a 2012 a small survey on Bicycles Network Australia revealed that 88% of consumers would not change their purchase behavior if GST were applied to the low-value imports. Since this survey, many Australian shops have become more competitive online, and arguably, the percentage of Australian online sales of bikes and related accessories has increased against overseas sales.