From the 1st of July this year, Australian online shoppers will have to pay 10% GST on any purchases made from overseas retailers that are below $1000 in value. It's a move that could 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 suggests 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?
ASOS will absorb GST on low-value purchases
It's not all doom and gloom for shoppers. As an exception to the rule, retail favourite ASOS has published a statement on their website ensuring Australian customers that the 10% GST on low-value goods will be absorbed by ASOS, and NOT passed on to the customer. (We love you, ASOS.)
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, would be subject to the 10% GST.
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.