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Cost recovery levy on low value imported goods

Cost recovery levy on low value imported goods

Leonie Ferretter and Claire Sing discuss the government's new cost recovery model for low value consignments.


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In addition to the collection of Goods and Services Tax (GST) on low value imported goods (LVIGs) from 1 July 2018, the Department of Home Affairs (Home Affairs) and the Department of Agriculture and Water Resources (DAWR) have proposed a new cost recovery model that includes a levy on low value consignments as outlined in the Trade and Cargo Activities – Cost Recovery Discussion Paper.

Given the significant growth of e-commerce, the volume of low value consignments (valued at A$1,000 or less) arriving in Australia has surged in recent years. The costs associated with border clearance activities is currently being subsidised by high value consignments, the volume of which pales in comparison.

In 2016-17, 38.7 million low value consignments arrived in Australia representing a 22percent increase on the previous year. Comparatively, the volume of high value consignments (goods valued over A$1,000) grew only marginally by 3 percent to 3.7 million. Over the next four years, the volume of low value consignments entering Australia is estimated to increase by a further 31 percent.

Home Affairs and DAWR are considering introducing declaration thresholds, namely applying the levy to entities that make more than 1,000 self-assessed clearance (SAC) declarations within a financial year.

The Government’s push to levy all high value and low value consignments may provide greater impetus for those traders considering applying for the Australian Trusted Trader Programme, which operates to alleviate certain transactional import processing costs as a reward for being an accredited low risk partner.

Feedback on the Discussion Paper from all interested parties and stakeholders was due by 2 March 2018 but has now been extended to 31 March 2018 given the high level of interest in these changes.

Please contact us for a detailed discussion on what these proposed changes means for your business.

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