In brief - Merchants, electronic distribution platform operators, online market places and re-deliverers among businesses that may be impacted
Australia has recently introduced legislation to make supplies of low value goods purchased by consumers and imported into Australia subject to GST. Such supplies will therefore be treated in a similar manner to supplies made within Australia.
Domestic supplies made between retailers and customers are generally subject to GST. That is, the retailer is liable for the GST, but recovers it from the consumer (in the form of higher prices). Australian retailers allege that this created a competitive disadvantage - compared to supplies made by foreign suppliers that (up until now) did not fall with the scope of Australian GST, and placed significant pressure on the Government to "equalise" the playing field created by the differential GST treatment of their supplies (the Productivity Commission
observed that factors other than GST were likely the real cause of the unlevel playing field).
Importantly, it is worth noting that GST is, and will continue to be, imposed on the importation of goods with a value of more than
$1,000. It is collected by Australian Customs at the border and this will not change as a result of the new law.
In brief, the amendments require certain overseas suppliers who supply LVIGs (low value imported goods) to remit GST. The flipside to that is that those suppliers should start collecting it from Australian consumers in the payment process.
Some suppliers have started levying GST on LVIGs (presumably to remit it) and others have ceased exporting to Australia. This includes Amazon, which has decided not to permit any of its overseas organisations to export goods to Australia, leaving only Amazon's Australian entity able to send goods within and to Australia.
There is no mechanism in international law to compel overseas suppliers to do so, unless that supplier has assets in Australia. It is unclear whether the new legislation will have much effect or collect much revenue.
Read more about how the new system will work, what is covered under offshore supplies, how to prevent double taxation, and whether Australia has the power to compel overseas entities to pay and remit GST
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2022.