From 1 July 2018, where a non-resident supplier sells goods valued at less than AUD $1,000 (Low Value Goods) to an Australian consumer (being Australian residents that are either not registered for Australian GST or do not acquire the goods for the purpose of an enterprise that the entity carries on), these will be subject to Australian GST (subject to the supplier meeting the GST registration threshold requirements).
If you or your clients make supplies that fall within the scope of the changes discussed below, it would be useful to review existing agreements to ensure they still work as originally intended. It is also prudent to flag these changes with non-resident suppliers to ensure that they are also compliant with the GST changes.
These changes will impact parties dealing with cross border supplies to Australian consumers, (which may include goods such as clothing, cosmetics, books and electronic appliances).
Specifically, the changes to the Australian GST rules amend the ‘connected with Australia’ rules to:
- treat the operator of an electronic distribution platform as the supplier of Low Value Goods (where the goods are purchased through the platform and delivered to Australia with the assistance of supplier or operator)
- treat re-deliverers as the suppliers of Low Value Goods where goods are delivered outside Australia and the re-deliverer then facilitates their delivery to Australia (i.e. as part of shopping or mailbox service)
- treat non-resident merchants as the suppliers of Low Value Goods
- allow non-resident suppliers of Low Value Goods to elect to be ‘limited registration’ entities
- have exceptions, such as that a supply of Low Value Goods will not be connected with Australia if, after taking reasonable steps, the supplier reasonably believes that the goods would be a taxable importation and
- impose a reverse charge on certain Australian companies who are registered for GST if their acquisition of low value goods is not fully creditable (i.e. if the acquisition relates to private use or to making an input taxed supply).