International
Low value imported goods
Low value imported goods are goods valued at $1,000 or less bought from overseas by consumers, where the overseas seller or platform generally must charge GST at the point of sale.
Low value imported goods are goods that are purchased from overseas sellers, are delivered to Australia, and are valued at $1,000 or less. Since 1 July 2018 special GST rules apply to them. Instead of the GST being collected at the border, the supplier or an electronic distribution platform is generally responsible for charging GST on the sale to Australian consumers.
The rules apply when the overseas supplier, or the platform, exceeds the registration threshold. In general, an overseas seller or platform must register for GST if its sales of low value goods to Australian consumers reach $75,000 or more in a 12 month period. Once registered, they charge 10% GST at checkout and report it to the ATO, often using a simplified registration system for non-resident businesses.
Not all goods are covered. Alcohol and tobacco products are excluded from the low value rules, and goods valued above $1,000 are taxed at the border in the usual way. Goods that would be GST-free if supplied in Australia, such as certain basic food or medical items, are also not taxed under these rules. The value is generally worked out on the basis of the sale price of the goods, and bundles can raise questions about how the threshold applies.
For consumers, this means the price they see online may already include GST, and there is generally no separate border collection for these purchases. For Australian businesses that buy low value goods from overseas for business use, the supply may be treated as a business purchase. A registered business can generally claim a credit for GST charged, if it has the right evidence and the purchase is for a creditable purpose.
Australian retailers pay attention to these rules because they affect competition. Overseas sellers who charge GST put themselves on the same footing as local retailers. Electronic distribution platforms and online marketplaces may be treated as the supplier of the goods in some circumstances, so they are responsible for the GST rather than the individual seller using the platform.
Common mistakes include assuming no GST applies to small overseas orders, and overlooking the exclusion for alcohol and tobacco. This is general information only, so confirm your situation with the ATO or a registered tax professional.
Worked example
An Australian consumer buys a $400 jacket from an overseas retailer registered for GST under the low value rules. At checkout GST of 10% x $400 = $40 is added, so the consumer pays $440, and the retailer reports the $40 to the ATO. No GST is collected at the border. If the jacket were over $1,000, GST would instead be collected when it entered Australia.
Practical tips
- A price shown at checkout for a low value overseas order may already include GST, so check the receipt.
- Alcohol and tobacco are excluded from these rules, and goods over $1,000 are taxed at the border.
- If you buy for your business, keep the receipt showing the GST so you can claim a credit if you are registered.