International
Taxable importation
A taxable importation is an importation of goods into Australia that attracts GST, as opposed to a non-taxable importation such as goods that would be GST-free or input-taxed if supplied locally.
A taxable importation is the technical GST term for goods that are brought into Australia and are subject to GST. Most imports of goods are taxable importations. The GST is charged because the goods are entering the Australian market, so they are taxed in the same way as locally supplied goods. The person importing them, rather than the overseas seller, is generally the one liable.
Some importations are not taxable. These generally include goods that would be GST-free if they were supplied in Australia, such as certain basic food and some medical items, and goods that would be input-taxed, such as certain precious metals. Goods that are re-imported in certain circumstances, and goods imported under particular customs concessions, can also be non-taxable. Whether an item is taxable depends on its nature, and sometimes on how it is being used.
Where an importation is taxable, the value of the taxable importation is worked out as the customs value, plus international transport and insurance costs, plus customs duty, and in some cases other taxes such as wine equalisation tax or luxury car tax. GST of 10% is calculated on this total. The importer may pay it at the border, or defer it where the deferred GST scheme is available.
A GST-registered business that imports taxable goods for a creditable purpose can generally claim an input tax credit for the GST. The credit is claimed in the BAS, with the import declaration acting as the evidence, instead of a tax invoice. If the goods are for private use or for making input-taxed supplies, the credit is not available or is limited.
Low value goods that are bought by consumers online have a separate set of rules, with the GST normally charged by the overseas seller or platform rather than collected at the border. In those cases, the importation of goods valued at $1,000 or less is generally treated as non-taxable at the border, because the GST is picked up at the point of sale instead.
Common misunderstandings include thinking GST applies only to goods above a certain value, and thinking the importation is the same as a normal purchase. 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 business imports equipment with a customs value of $8,000, plus $600 for freight and insurance and $400 duty. Value of the taxable importation is $8,000 + $600 + $400 = $9,000. GST is 10% x $9,000 = $900. The business claims a $900 credit, and the cost of the equipment is $9,000 excluding the GST credit for income tax purposes.
Practical tips
- Check whether your goods would be GST-free if sold in Australia, as they may then be non-taxable on import.
- Keep the import declaration as evidence for your GST credit.
- Remember that importations of low value goods bought online follow separate rules.