The GST, or Goods and Services tax, adds a 10% fee on many goods and services sold in Australia. This is something that effects all businesses, no matter what industry you operate in. Inland Revenue determined that the government was missing out on $140 million in GST revenue for goods that were bought on the internet. As part of an effort to find ways to collect tax on low value imports, some changes will be implemented that you should know about.
Non-Resident Vendors Required to Pay GST
The GST will utilize a vendor registration model. This will require all non-residents with Australian turnover of over $75,000 to register and pay the GST. The changes will begin on 1 July 2017. The rule applies to vendors, goods forwarders, and electronic distribution platforms.
GST on Digital Goods
Rather than lower the GST-free threshold, which is currently at $1,000, customs found another way to generate revenue. Instead, digital goods will be subject to the GST. This includes the purchase of all digitally delivered products, including movies, music, and software. The tax will be applied regardless of the price of the item. The new changes slated to begin next year will lead to a higher tax on digital goods compared to those paid on physical merchandise.
What Does the GST Change Mean for Consumers?
Consumers will notice an increase in the total price of items they buy over the telephone or online from overseas sellers. Most purchases will be subject to the 10% GST (including delivery fees). Any orders that contain multiple items that total over $1,000 will also have to pay applicable customs duties.
What Does the GST Change Mean for Overseas Suppliers?
Any overseas vendor that sells low value goods that total under the $75,000 mark will notice no difference. The change only effects those selling over $75,000 in Australia. Those that go over will now be responsible to register as a vendor and pay GST on all orders.
What Does the GST Change Mean for Australian Businesses?
Australian businesses are already subject to the GST. Therefore, no change will be noticed. The benefit is that any competition you have overseas will now also be forced to pay the GST, which means you may be able to operate more competitively when selling to Australian consumers than you once did.
Preparing for GST Changes
If you will be affected by the GST changes, now is the time to prepare. Understand the requirements and make sure your customers know why they see an additional fee applied to each transaction. BIS Cosgrove can help you make sound financial decisions as you prepare for the GST update.