From 1 July 2018, low value goods that cost $1,000 and below, supplied by overseas retailers to Australian consumers, will be liable for GST.
Under the new changes, foreign suppliers, as well as re-deliverers and electronic distribution platform providers such as Amazon and eBay, will be liable for GST on low value imported goods sold to an Australian consumer.
Institute of Public Accountants senior tax adviser Tony Greco believes that while the legislation will help level the playing field for smaller operators in Australia, there will be teething problems in administering the collection.
“You're asking entities who aren't in Australia to comply and it's always problematic,” said Mr Greco.
“It's like asking a non-resident to pay tax once they've they have left the country. It's always going to be a difficult exercise getting someone outside Australia to comply with our laws.
“Importation is a big thing for any business, if customs levy the GST and they get the appropriate paperwork and they claim it back, one presumes the same will operate if they were charged GST for low value imports but again they can avoid the impost in the first place if they provide the ABN details and the details of their GST registrations.”
Similarly, BDO Indirect Tax Partner Fady Abi Abdallah believes the debate over collection models will continue.
“The changes on GST to be paid by overseas retailers are likely to have some teething problems in the administration phase as practicalities are ironed out but the fundamental shift was a good policy in levelling out the playing field and protecting local retailers,” said Mr Abdallah.
“While the changes don’t take effect until 1 July 2018, businesses importing goods into Australia will need to begin reviewing their positions now and to check whether supply chains are affected and determine which entities in the supply chain are actually liable for GST.
“Australian businesses that purchase low value goods from overseas should check to make sure that overseas suppliers are not imposing GST on supplies of these goods unnecessarily.”
The impending arrival of Amazon in Australia has further sparked concerns over the tax treatment of the global e-commerce giant but BDO indirect tax partner Chris Vittas believes it should not be treated any differently to any other entity once it launches on local soil.
“The perceived preferential treatment of online shopping has been a contentious issue for a while with the Australian retail sector lobbying hard to ensure that where a business is benefiting from sales to Australian consumers, the purchase is taxed in the same way as local retailers,” said Mr Vittas.
“Amazon offers a potentially powerful platform and could help cut the cost of postage and transport but small businesses planning to build up stock to meet the expected surge in sales should read contracts carefully.”