With the recent launch of Amazon Australia, many overseas merchants are wondering how the GST system works for imports and sales of low-value goods to Australian consumers through the Amazon AU platform. Read on...
Amazon has finally launched in Australia giving overseas clients a new opportunity to expand their e-commerce business into new markets. Generally speaking, when doing business in Australia, businesses should have an understanding of the typical business registrations required, as well as any specific tax requirements set forth by Amazon Australia.
This article provides a brief overview of the GST considerations relevant to importing low-value goods into Australia for sale through the Amazon AU platform. Please note Australia introduced special tax legislation on 1 July 2018 which addresses such sales, and such legislation is unique to Australia.
GST on low value imported goods
As of 1 July 2018, Australian goods and services tax (GST) will apply to sales of low-value goods imported by consumers into Australia.Businesses that meet the registration threshold of A$75,000 will need to:
- register for GST
- charge GST on sales of low value imported goods (unless they are GST-free)
- lodge returns to the ATO.
These businesses may be merchants who sell goods, electronic distribution platform operators such as Amazon AU, or re-deliverers. For goods imported in a consignment over A$1,000, any GST, customs duty and clearance charges will be charged to the importer at the border under existing processes.
When to charge GST
You are only required to charge GST on a sale of low value imported goods if it is a taxable sale. A sale is taxable if:- it is connected with Australia
- you are registered or required to be registered for GST
- it is made for payment and is part of conducting your business
GST does not apply to sales of low value imported goods made to Australian GST-registered businesses making the purchase for business use.
The entity that charges GST on these sales can be the merchant who sells the goods, an electronic distribution platform operator such as Amazon AU, or a re-deliverer. If more than one of these entities is involved in the sale, you will need to work out who charges GST.
Deciding who charges GST
Under the new law, you may need to register for, and charge, GST if you are:
- the merchant who sells the goods
- an operator of an electronic distribution platform (EDP), such as an online marketplace like Amazon AU through which merchants sell goods, or
- a re-deliverer that helps to bring goods to Australia.
However, only one entity is required to charge GST on a sale. There is an order of priority as follows:
- if an EDP operator is responsible for GST on a sale, the merchant will not be responsible for GST.
- if an EDP operator or the merchant is responsible for GST on a sale, a re-deliverer will not be responsible for GST.
- Customs brokers and transporters are also indirectly affected because they provide a service to suppliers who do have to charge GST.
The responsible supplier (EDP operator, merchant or re-deliverer) is required to include certain tax information on import documents.
Transporters and customers brokers from the country of export may be asked by the supplier to ensure GST-related tax information is provided to Australian transporters and customs brokers so that import documents are completed correctly.
Merchants selling through an electronic distribution platform such as Amazon AU
An EDP is a service that is delivered by electronic communication (such as a website), which allows you to make sales of low value imported goods available to purchasers. An example is an online marketplace such as Amazon AU.
What is Low Value Imported Goods GST?
From July 1, 2018 Australia implemented legislation to impose Goods and Services Tax (GST) on imported goods which have a customs value of $1,000 or less (Low Value Imported Goods or LVIGs). From this date, Amazon is required to calculate, collect and remit 10% GST on LVIG sold on amazon.com.au by third-party (3P) sellers that are shipped from outside Australia to customers in Australia.
How does Australia’s Low Value Imported Goods GST affect my Selling on Amazon AU account?
From July 1, 2018, a 10% GST will apply to sales of LVIG that you make on amazon.com.au. To cover the GST payable, Amazon AU will deduct 1/11th from the price and delivery costs you set in Seller Central for any goods you tell Amazon ship from outside Australia. To ensure that Amazon can determine if they need to collect GST on your sales, and to streamline the process for you to generate the required customs documentation for orders which you ship from outside Australia and that are subject to LVIG GST, you will need to: (1) make sure that you have set your prices and delivery costs to include the GST and (2) update your ship-from location in Seller Central.
Am I responsible for collecting and remitting Low Value Imported Goods GST into Australia for sales on Amazon AU?
No, when shipping low-value goods from overseas to customers in Australia, Amazon AU will calculate, collect and remit the LVIG GST directly to the Australian Tax Office.Will it be different if I use FBA to sell in Australia?
You (and not Amazon) are responsible for your own GST obligations when selling to customers in Australia using the FBA service. If your turnover is greater than $75,000 AU per annum you will be required to register and account for GST on sales of taxable products. If you are registered for GST in Australia and you import your products into Australia you may be entitled to claim any GST that you incur.How do I identify what orders are subject to Low Value Imported Goods GST?
LVIG GST is payable on imported goods which have a customs value of $1,000 or less sold on amazon.com.au by third-party (3P) sellers that are shipped from outside Australia to customers in Australia. In the Order Details page under Tax Collection Model section, each order that is subject to LVIG GST will be identified as LowValueGoods_AustraliaI am a Business and am GST registered. I have provided Amazon AU my Australian Business Number (ABN). How will Low Value Imported Goods GST impact my selling experience if I am a Business?
Having an ABN on file does not change the requirement for Amazon to collect and remit GST on low value imported goods sold on amazon.com.au. You remain responsible for collecting and remitting GST on goods you sell on amazon.com.au that you ship from within Australia if you meet the GST registration threshold.How will Amazon calculate the 10% GST?
For LVIG items sold on Amazon.com.au and shipped from outside Australia, 1/11th of the sales price and delivery costs you set in Seller Central will be deducted by Amazon and remitted to the Australian Tax Office (ATO) to cover the LVIG GST.What is considered a taxable item?
Taxable items are goods which are ordinarily subject to GST in Australia. Items which are classified as GST-free (such as certain health, food, beverages and medical items) will continue to be non-taxable regardless of customs value.How will Low Value Imported Goods GST impact Amazon Selling Fees?
The Amazon.com.au Selling Fees will be calculated on the price you set for your item in Seller Central, the price will be inclusive of GST.How do I ensure that my LVIG package clears customs and is delivered to an Australian address? What additional information do I need to include on my invoice or package when shipping LVIG into Australia?
If you are shipping from outside of Australia, the customs documentation which you provide with the order must include the details of the products you are sending, as well as the GST collected for each item within the order and the ABN of the company collecting the GST (Amazon Commercial Services Pty Ltd). You can find the required information when confirming the order on Seller Central, in the order reports and through Marketplace Web Services.Where can I find Amazon’s Business Number (ABN) in order to include this information on my import documents?
Amazon Commercial Services Pty Ltd’s ABN is 30 616 935 623. Please check with Amazon AU to ensure this number is current. Do not rely on this article as Amazon details are subject to change.Registering for GST
It is important to note that sales of low value imported goods from overseas made through Amazon AU will not count towards your GST sales threshold. As such you only need to register for GST if you make >$75,000 in sales of goods into Australia outside of the Amazon AU ecosystem, or if you make sales of goods from goods already sourced in Australia including FBA goods. If you want to register for Goods and Services Tax (GST), then you will need an ABN first.
Claiming back Goods and Services Tax (GST) on local purchases including Amazon seller fees.
One clear benefit of registering for GST is the ability to claim back GST on purchases made in Australia, including the seller fees imposed by Amazon. For every $110 of local purchases made it is likely you have paid $10 in GST, and thus would be eligible to claim this as a tax credit. To do this you need to be registered for GST. And to be registered for GST you need an ABN. You need to weigh up the benefits of being able to claim GST tax credits against the costs and compliance burden of being registered for GST in Australia.
Next Steps
All in all, it is generally worth obtaining an ABN when selling on Amazon. It is fairly inexpensive to obtain, has tax and commercial benefits, and it generally allows your business to be ready for other commercial opportunities that arise. We can assist your business with applying for an ABN and registering for GST.
https://www.abnaustralia.com.au/companies/international-packages#abn-registration
Phone +61 1300 226 226 to discuss how we can help.
Please note this article is for information purposes only and does not constitute legal advice. Should you have any queries or require more information, please contact the team at ABNAustralia.com.au.