Importing business goods to Australia often raises many questions from both non-resident business owners and consumers alike, who are keen to better understand how the new simplifed GST system works.
The main concern for non-residents who import goods into Australia is when should GST be charged to Australian consumers and how is the GST passed onto the Australian Taxation Office.
What is GST?
GST refers to goods and services tax on the sale of products and services in Australia – it is currently a flat-rate of 10%. It is like the Value-Added Tax (VAT) in various other countries or sales tax in the US.
How the GST rules affect overseas businesses
GST on low value imported goods came into effect on 1 July 2018, stating that Australian goods and services tax will apply to sales of low-value goods (less than AUD1000) imported by consumers into Australia.
Overseas vendors that meet the registration threshold – those with a total annual turnover of Australian sales worth AUD75,000 or more are subject to GST – must:
- register for GST with the Australian Taxation Office (ATO)
- charge and collect GST on sales of low value imported goods to consumers (unless they are GST-free or sales of alcoholic beverages and tobacco products)
- lodge returns with the ATO and makes payments to them
- ensure certain information is included in the customs documents for the goods.
This new law is designed to accurately charge GST so that businesses:
- will not charge GST on a sale when GST will be charged at the border, because an item is either:
- worth over A$1,000
- a tobacco product, or
- an alcoholic beverage
- will not need to charge GST on a sale if it is clear that multiple goods will be shipped to Australia in one consignment worth over A$1,000 – GST will be charged at the border instead
- will not need to charge GST on a sale of low value imported goods to Australian GST-registered business if they provide their Australian business number (ABN) and confirmation that they are GST-registered.
Non-resident businesses have 2 options to register for GST:
Option 1 – Simplified GST Registration
If your business meets the GST registration requirements, you can register quickly and easily using the simplified online registration process designed for international businesses at Simplified GST for non-residents.
Simplified registration is a two-step process:
Step 1 – Get an AUSid
To access the Simplified GST registration form you will need a secure credential called an AUSid.
This AUSid is the unique number that identifies you to the ATO.
Simply download the AUSid application using links here. Set up your account to securely access the online platform for simplified GST you need to.
When you set up your AUSid, you will be asked for –
- a username (must be unique)
- a password
- your given name
- your family name
- your date of birth
- your email address (must be unique).
You do not need to provide proof of identity.
Step 2 – Register for Simplified GST
Once you have your AUSid, you must register for Simplified GST. Click the ‘Register now’ button on the login page, to access our online services for non-residents using your AUSid.
Once you have completed your registration for Simplified GST, the ATO will send you an Australian Taxation Office reference number (ARN). This is your unique 12 digit identifier (for example, 12 345 678 9012) used to identify you in the ATO’s systems and may be used as an identifier on invoices.
The Simplified GST system in a snapshot
For non-residents you:
- do not have to prove your identity
- must use an ATO reference number (ARN) instead of an ABN
- cannot claim GST credits
- cannot issue tax invoices or adjustment notes
- must lodge your GST returns and pay GST quarterly
- can pay electronically via SWIFT bank transfer or credit card.
Option 2 – Standard GST registration
Registering for GST through the domestic GST system is an alternative. You will need to apply for an Australian business number (ABN) before you can register. Note that it could take more than 28 days to process your GST registration using this option.
If you are a standard GST registrant you:
- can get an Australian business number (ABN)
- can claim input tax credits
- are not limited to quarterly accounting periods
- use activity statements to report GST.
As we saw from the comments on the post mentioned earlier, the new GST rules on imported goods certainly left room for confusion amongst consumers. While the topic is vast, we hope this explanation will help boost your understanding when it comes to low-value goods being imported into Australia.
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Ready to speed up your Australian customer service?
Call us on 1300 319 870 or contact us here if you want to discuss how registering for the simplified GST on low value imported goods can help your non-resident business. It may be the edge you need over your competitors!