From the 1st of July this year, Australian online shoppers will pay 10% GST on any purchases made from overseas retailers that are below $1000 in value. It's a move that already has shoppers up in arms, and is sure to have a big affect on the way we shop online.
Overseas businesses who meet the $75,000 sales threshold for Australian GST will have to register and charge GST from their customers, just as Australian-based businesses currently do.
Why has this come about? What does it mean for Aussie consumers? Let's take a look at some common questions around this topic.
Why a GST on imported goods?
While many foreign retailers and local consumers think the idea is unenforceable, and even unfair, the Australian government insists that the introduction of such a tax will help in balancing international and domestic retail. In Australia we pay GST on products under $1000, so it stands to reason that the same rule should apply to foreign purchases.
Importantly, this measure will finally stop the unfair and distortionary GST low-value exemption enjoyed by foreign sellers since the introduction of the GST in 2000... (Scott Morrison)
Will the GST on low-value imported goods affect me?
How will marketplaces be treated under the new GST on imported goods?
Marketplaces like eBay Australia and Amazon Australia include a vast number of foreign sellers, and despite that fact that you may very well be buying through an Australian website, purchases from those foreign sellers under $1000 in value are subject to the 10% GST.
Amazon.com no longer shipping to Australian addresses
From 1st July 2018, and as a direct response to the GST on imported items, Amazon.com (the US site) ceased fulfilling orders to Australian addresses. Instead, customers are redirected to the same item at the Amazon Australia website.
Bear in mind that you can still purchase items from Amazon.com, but you will need a US address to do so. For those of us without relatives in the US who can help us out, it means having to use a freight forwarding company such as Australia Post's Shopmate.
If you do buy from Amazon.com using a US postal address, you will still be charged the 10% GST, but in many cases, the overall cost can still work out cheaper than buying locally.
Is the GST in addition to the proposed "parcel tax"?
Unfortunately yes, it would be. At this point, the parcel tax is still at proposal stage; if it comes to pass, it is rumoured to take the form of a flat-rate fee attached to overseas online purchases less than $1000 in value - and this would be in addition to the 10% GST payable by shoppers.
What are your thoughts on the new GST on low-value imported products? Do you think it will change the way you shop online? Drop us line below.