Selling across the ditch – GST on low value goods

Do you sell goods to Australia? If so, you may be affected by new Australian tax rules.

At present, goods valued under AUD$1,000 do not generally have Australian GST applied to them where they are sold into Australia directly to the end customer. However new rules will now apply from 1 July 2017 to impose Australian GST on goods valued at $1,000 or less (‘low value goods’), where the supplier’s GST turnover (on low value goods sold into Australia) in a given year exceeds the threshold ($75,000 for most entities and $150,000 for non-profit bodies).

If this sounds like a slice of your business, you will be required to register for Australian GST, charging Australian GST (currently 10%) and remitting it to the Australian tax system. This applies whether your customers purchase goods from you online, over the phone or in person in a retail outlet here where your business ships the goods over to Australia. It applies whether the goods are physically here in New Zealand or sourced elsewhere overseas.

For New Zealand businesses exporting low value goods to Australia, the Australian Taxation Office (ATO) is talking about a GST registration process whereby you elect to be a ‘limited registration entity’ and return GST that way.

Along with registering for GST, you will need to look at how your software and record systems are set up and rethink your pricing and marketing.

The Bill hasn’t been passed yet but it looks as if it will. So if you sell low value goods to Australia and your GST turnover of low value goods sold into Australia is over or close to $75,000, please contact us to talk about how this might affect your business.

GST: in the crystal ball

The latest move in Australia to collect GST on low value goods bought from overseas suppliers is part of a global drift towards capturing tax cross border and ensuring the internet is no longer above tax.However, in New Zealand, goods worth less than $400 purchased from overseas suppliers don’t have GST imposed on them (though duty may apply). Retail NZ states that this exposes Kiwi businesses to unfair competition, as they are subject to GST while foreign businesses undercut them on low-value goods.

Some two-thirds of all goods sold to New Zealanders come from the 20 biggest global retailers. (Like Amazon, rumoured to be establishing a base in Sydney, potentially making shipping cheaper for Australian and New Zealand customers). Retail NZ estimates that the Government is missing out on at least $200 million in GST this way.

Retail NZ is calling for all overseas companies selling to Kiwis to be required to register for GST. It seems the next logical step. We’re watching with interest and will keep you posted.

You’ll remember that from October last year, we now have to pay GST on ‘remote services’ supplies from overseas vendors that were previously not subject to New Zealand GST – the so-called Netflix tax. Businesses in the 28 member states of the European Union already have to charge VAT at the rate applying in the customer’s country.

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