GST on supplies of low value goods to Australian consumers – delayed until 1 July 2018

By Craig Whatman - June 23, 2017

In November 2016 the Australian government introduced legislation imposing GST on sales made by offshore suppliers of low value goods (customs value of $1,000 or less) to Australian consumers. The new rules were proposed to have effect from 1 July 2017. The legislation has now been passed by the Parliament but the commencement date of the changes has been delayed until 1 July 2018.

The changes have been introduced to level the playing field between Australian based retailers which are generally required to charge GST to customers on all sales, and offshore suppliers which are generally not required to charge GST on sales of low value goods.

While the delay to the commencement of the changes has been welcomed by offshore suppliers impacted by the measures, Treasurer Scott Morrison has said that it will not be acceptable for affected entities not to have their GST systems and processes ready for the new start date of 1 July 2018.

The amendments made to the legislation also mandate a Productivity Commission inquiry into the impact of the proposed measures, including considering alternative methods for collecting GST on sales of low value goods from offshore suppliers to Australian consumers. There have been concerns expressed in relation to the Australian Taxation Office’s ability to monitor tens of thousands of offshore suppliers that may be caught by the measures, which will be considered as part of the Productivity Commission’s inquiry.  However, the commencement of the new rules on 1 July 2018 is not dependant on the outcome of that enquiry.

Any offshore suppliers that are impacted by the changes and that have not yet prepared their systems and customer terms for the new rules should commence that preparatory work now so that they are ready for the 1 July 2018 start date.

For full details of the impact of the changes, please refer to our previous Tax Bulletin.

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