Australia has moved forward with taking steps to impose GST on the sale and importation of low value goods imported by consumers from 1 July 2017. Under the current rules, goods valued at AUD 1,000 imported into Australia are not subject to GST, however, this is slated for abolition.
The Treasury Laws Amendment (GST Low Value Goods) Bill 2017 was introduced into the Australian Parliament on 16 February 2017, however, it has not yet passed.
The general intent of the proposed law is that low value goods imported by consumers will face the same tax regime as goods that are sourced domestically. In essence, overseas suppliers that have an Australian turnover of AUD 75,000 or more will be required to register for, charge, collect and remit GST (at the rate of 10%) for low value goods supplied to consumers in Australia, using a vendor registration model.
Under the proposed laws, a new taxing nexus treats supplies of goods valued at AUD 1,000 or less as connected with the Indirect Tax Zone (ITZ) and subject to GST, if the goods are purchased by consumers and are brought to the ITZ with the assistance of the supplier. This includes both where the supplier delivers the goods and where the supplier procures, arranges or facilitates the delivery of the goods into the ITZ.
A supply of goods will be taken to be low value goods if the customs value of the goods would have been AUD 1,000 or less, had the goods been imported at the time when the consideration for the supply was first agreed between the parties. For goods with a value greater than AUD 1,000, the GST will continue to be collected by the Australian Customs (not the non-resident), and will continue to be charged to the importer recorded at the Australian border.
Special rules will apply where the low value goods are supplied through an electronic distribution platform (eg, a marketplace), to shift the GST responsibility to the operator of the platform (rather than the supplier of the good). This is consistent with the electronic distribution platform rules applying as part of the changes to the cross border supplies (ie, Australia's Electronic Services rule) coming into effect from 1 July 2017.
If this law is passed, Australia will be the first jurisdiction to remove a low value threshold and impose the obligation on an overseas supplier.