GST on Imports & Export Tax Australia
Australian Import Tax Management Solutions
Big changes to the import tax in Australia took place on July 1st, 2018. Are you compliant with the new charges and processes? Here’s what you need to know about the GST on imports Australia is now facing, to ensure that you comply.
The ATO now requires all foreign shippers and electronic distribution platforms who ship in excess of A$75,000 to register with them and apply to obtain a GST number. Registration is required to obtain an Australian Registration Number (ARN). This is an alternative to an Australian Business Number (ABN) or Australian Company Number (ACN) and does not require the company to file annual tax declarations.
If a shipper does not expect to surpass this threshold of A$75,000, they will not be required to pay GST. However, if the shipper does exceed the threshold, they will be required to pay 10% on the entire value. If a shipper wishes to “cover” themselves in the event of exceeding the threshold by collecting the GST, they are legally responsible to pay this value to the ATO regardless of the threshold level.
The alternative to any liability is where the shipper DOES NOT arrange for the shipping to the buyer. In this case, the freight agent is responsible to pay and collect the applicable GST and their shipping costs (of which GST will also apply) from the receiver.
Sellers who sell in a foreign currency will have huge exposure to exchange risks, with potential AUD settlement taking place up to to 4 months after collection. Shippers following an EDP will not have any process to reclaim GST for returns, which is particularly important for high rated returns such as apparel. Many SME shippers will also find it challenging to adapt their websites to include this GST at checkout.
Most foreign-based companies will engage accounting firms to handle this. But these firms charge an excessive fee and will be a significant burden, particularly to SMEs. A quarterly filing cost will run between A$2000-A$5000, and the ATO requires online filing by registered Tax Agents and CPA’s. The ATO will monitor activity and value capture through Australian Border Force, where quarterly reconciliations will take place.
Items arriving through the postal system will have new barcode data, with both shipper and value data captured. This will create the same collection policies through the mail channel, leading to massive delays such as those seen with Royal Mail.
Our Import GST Solutions
We’ve developed some smart import GST solutions to help you adjust to and comply with the changes to import tax Australia has put in place. These are provided free of charge where Freipost services are engaged, or through a nominal subscription fee where a shipper’s own resources are used. More information is available by contacting us directly.
Freipost offer a clear guide to the latest ATO processes and regulations surrounding the export tax Australia requires and the GST on imports to Australia. We also offer a step by step guide on how a foreign shipper can apply for an ARN and a GST number.
The Freipost Qbit software will then enable the shipper to produce all label and sortation functions, either using the services of Freipost or their own shipping credentials. All value and shipping data can be captured through Qbit or through an API and converted to AUD using the applied Border Force exchange rate.
The Freipost system will also provide the shipper with an automated Business Account Settlement (BAS) lodgement for GST to the ATO for each quarter, without the need to engage the services of a local accounting firm to ensure their compliance.
Freipost can provide a GST collection facility on arrival at the intended destination. This will support shippers who don’t have the facility to change values or integrate GST collection at check out level.
This solution allows shippers to maintain their existing currency and sales values on their website. Instead, we suggest the buyer be reminded that taxes and charges will be payable.
When the data is entered into the Freipost Qbit software (upload or API) the system will automate a collection notice to the customer. It will then declare the respective GST component to the ATO by uplifting the original sales value at the border.
The collected GST will be held in a trust account and upon lodgement of the quarterly BAS report, payment will be made to the ATO with any exchange rate risk eliminated.
Make it easier to receive with our comprehensive concierge solution. Using the Freipost Qbit Software, full reports are viable thanks to features such as drawback reporting. It enables all inward stock data including the duties and GST on imports Australia requires, shipping details and the quantities to be recorded.
All subsequent exports of an SKU will present a stock reconciliation, including original import data. This will assist in the reclaim of prior paid duties through customs and tax authorities.
Qbit also allows for Return Management Authorities labelling to be produced, including prepaid local postal/couriers. These returns will be recorded and reported through Border Force and support the claim for prior GST paid on the original import.