International
Import
An import is the bringing of goods into Australia from overseas, which can involve GST, customs duty and border processes, and may also include certain services and digital products.
In everyday tax terms, an import is the bringing of goods into Australia from another country. This can be a business buying stock from an overseas supplier, a shop ordering equipment, or a person buying something online and having it shipped to them. When goods cross the border, several rules can apply, including customs clearance, duty and GST.
For GST, importing goods is generally taxable unless an exception applies. GST of 10% is charged on the value of the taxable importation, which is the customs value, plus the cost of international transport and insurance, plus any customs duty. This is collected at the border, normally by the Australian Border Force on behalf of the ATO, though special arrangements apply for low value goods bought online.
Registered businesses importing goods for use in their enterprise can generally claim a credit for the GST paid on the importation, because it is a creditable acquisition. Businesses can often apply to use the deferred GST scheme, under which GST on imports is not paid at the border but reported and claimed on the BAS. This improves cash flow because the GST paid and credit claimed net off in the same BAS.
Importing is not limited to physical goods. Services and digital products bought from overseas suppliers may also have GST consequences. Some are subject to GST charged by the overseas supplier, and in some business to business situations the recipient may need to account for GST under a reverse charge arrangement. The rules depend on the nature of the supply and who the buyer is.
Records matter. Keep the commercial invoice, the freight and insurance documents, the customs declaration and proof of GST paid, generally for five years. These support both the GST credit and the cost for income tax purposes. If you use a customs broker or freight forwarder, ensure you get copies of the import declaration with the amounts shown.
Common mistakes include forgetting that GST applies on top of the cost, omitting freight when estimating the total, and failing to keep import records. This is general information only, so confirm your situation with the Australian Border Force, the ATO or a registered tax professional.
Worked example
A registered retailer imports stock with a customs value of $20,000, plus international freight and insurance of $1,500. Assume customs duty of $1,000. Value of the taxable importation is $20,000 + $1,500 + $1,000 = $22,500. GST at 10% is $2,250. The retailer claims the $2,250 as a GST credit in the BAS, and the other costs form part of the stock cost.
Practical tips
- Include freight, insurance and duty when estimating the GST on an import.
- Ask about the deferred GST scheme if you import regularly, as it can improve cash flow.
- Keep import declarations and invoices for five years to support your GST credit.