GST on low value imported goods imported by consumers into Australia From 1 July 2018

GST on low value imported goods imported by consumers into Australia From 1 July 2018

From 1 July 2018, what some have called the “Gerry Harvey Tax,” means GST will apply to retail sales of low value goods (A$1,000 or less) imported to Australia, when purchased by Australian consumers.

For low value goods, GST is collected through the sale, instead of at the border.

The sale is considered a transaction of the Australian consumer with an international business, outside Australia.

Overseas Suppliers with an Australian turnover of A$75,000 or more in a 12 month period are required to register and charge GST under the plan.

The legislation treats 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.

Under the new law, overseas suppliers may need to register for, and charge, GST if they are:

• the merchant who sells the goods
• an operator of an electronic distribution platform (EDP), such as an online marketplace through which merchants sell goods, or
• a re-deliverer that helps to bring goods to Australia.

The new legislation is similar in nature to the Government’s so-called “Netflix Tax” – the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016 – Operative 1 July 2017, which sees the GST applied consistently to all supplies of digital products, such as software, and other imported services to Australian consumers.

The similarity between the two pieces of legislation has acted as sore point for eBay, one of the online operators that is set to be affected by the new laws.

According to the Australian Treasurer, Scott Morrison, the 1 July 2018 start date was designed to give offshore suppliers and online marketplaces like eBay and Amazon time to implement the change.

The Backstory of the GST exemption for imported goods valued atA$1,000 or less

On 1 July 2000 the Australian Government implemented a new value added tax system, the Goods and Services Tax (GST).

At that time, I was contracted by the Australian Federation of International Forwarders (AFIF) with funding provided by The GST Start-up Assistance Office, to develop, organise and present 47 seminars nationally April – June 2000, to introduce and explain the GST to Australia's Import-Export and International Transport Community.

I also represented AFIF on the Australian Taxation Office Shipping Industry Partnership set up to assist the implementation of GST for the Transport Sector Australia.

The Australian Customs Service representative, Tom Marshall, indicated the Customs had undertaken a Cost Benefit Analysis and concluded the collecting GST on imports into Australia valued at A$1,000 or less would cost more to collect that the revenue collected.

The Gerry Harvey Tax genesis in 2010

The GST Low Value Goods Tax coined by some as “The Gerry Harvey Tax," as Gerry Harvey, the co-founder of retailer Harvey Norman, was one of the most vocal agitators for extending the GST to all overseas purchases to create a "level playing field" for local retailers. (Gerry Harvey calls for GST on online purchases – Sydney Morning Herald - 23 November 2010)

A campaign by a number of major Australian retailers included full-page advertisements in Australian major newspapers.

To my mind, at the time, it backfired somewhat as it highlighted the cost benefits of Australian consumers purchasing goods online from overseas countries and probably contributed to enticing more Australian consumers to shop online from overseas countries.

Gerry Harvey has a long history of complaining about things, particularly when it comes the protection of brick and mortar retail. - Gerry Harvey’s dire warning about Amazon News.com.auFebruary 28, 2017

The Productivity Commission (the Australian Government's independent research and advisory body on a range of economic, social and environmental issues affecting the welfare of Australians) convened a number of enquiries into this contentious issue without change.

However it’s most recent recommendations have resulted in the imposition by the ATO of GST on low value imported goods, 18 years after the implementation of GST in Australia.

More Information from the Australian Taxation Office (ATO):

GST on low value imported goods

Tax on retail sales of goods and services into Australia

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