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GST burden to fall on offshore online marketplace operators

GST burden on offshore online marketplace operators

Kate Law and Anna Derlacz discuss the Productivity Commission's report outlining its preferred GST collection model for low value imported goods.


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On 31 October 2017, the Australian Government’s independent research and advisory body – the Productivity Commission (PC) – handed in its final report into Collection Models for GST on Low Value Imported Goods (PDF 1.12MB) with a clear message.

The Government’s legislated hybrid vendor collection model, although not perfect, is here to stay, making Australia a ‘first mover’ globally.

From 1 July 2018, offshore sellers, online marketplaces and re-deliverers will be liable for goods and services tax (GST) on goods valued at less than AUD1,000 that are imported by Australian end consumers.

In its detailed report, the PC found that:

  • the legislated model is the most feasible among the imperfect alternative models for collecting GST given the short timeframe for implementation
  • while transporter-based collection models could capture more revenue, paper-based declaration processes for international mail would impose high compliance costs
  • there is insufficient basis to recommend delaying the implementation of the legislated model to a date after 1 July 2018
  • a comprehensive review of the collection model is recommended for 2023, absent exceptional circumstances arising in the interim
  • businesses and online marketplaces selling low value imported goods into Australia will need to make sure that their system setup and terms of business are sufficient to ensure compliance from 1 July 2018.

Practical issues

Practical issues will include:

  • valuing goods to identify low value goods sold to Australia
  • differentiating sales to end consumers (B2C) from business customers (B2B) and collecting information to support the position
  • avoiding double taxation where goods or a consignment valued over AUD $1,000 are taxed at the Australian border
  • determining how to report returns/refunds
  • complying with notification requirements to customers, logistics providers and Australian Customs.

Meanwhile, Australian consumers can expect a rise in the price of goods that they purchase from offshore on or after 1 July 2018.

Just another reason to shop big this year.

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