Practical Guide – Australia GST and Customs Duties for Cross-Border E-Commerce Sellers 

Background

Within the lines of the following Article, you will have a chance to become familiar with the Australian GST framework for e-commerce vendors and the customs rules specifically focused on cross-border supplies of goods. 

Australia’s GST and Customs Duties framework for overseas vendors, importers, and domestic sellers is, in many instances, similar to the EU’s rules for distance sales of goods. Compliance with the Australian GST regime for cross-border sales of goods is closely tied to the registration threshold of AUD 75,000. 

Alongside the registration threshold, equally important parameters around which the Australian GST compliance for e-commerce vendors is built are the following: 

• Customs duty relief threshold for low-value goods – equal to or less than  AUD 1000 
• Standard GST rate – 10% 
• Determining who is responsible for GST collection – seller, electronic distribution platform(EDP), or importer(customer or other Importer of Record) 

Australia GST Rules for E-Commerce Sellers 

The standard GST rate at 10% is applied to most goods and services sold to customers residing in the country. The first challenge that overseas e-commerce sellers need to verify is whether their sales are connected with Australia, and whether they meet the GST registration threshold. 

Non-resident economic operators that make supplies to Australian customers in most of the cases(if not earlier) need to register for GST when their Australia-linked taxable income reaches, or is expected to reach, AUD 75,000 in any 12 months. 

For low-value goods imported into Australia, with a customs value of AUD 1,000 or less when sold directly to consumers(B2C), the GST applies at the point of purchase(not at the point of import). These imports, in most of the cases, don’t bear any customs duty, and the clearance is expedited. This threshold doesn’t apply to imports of tobacco, tobacco products, or alcoholic beverages. 

E-commerce vendors should initially review the following questions when determining their Australia GST exposure: 

• Can the imports be treated as low-value imports? 
• Are the goods sold directly by the seller or through an electronic distribution platform(EDP) such as a marketplace?
• Are the goods shipped from overseas or supplied from inventory already located in Australia?

The answers to these questions define who is accountable for GST collection and accompanying reporting duties. 

GST Rules for Low-Value Imports 

What are Low-Value Imports? 

Low-value imported goods on most of the occasions are goods whose customs value is AUD 1,000 or less. For low-value goods imported into the country, GST is collected at the point of sale(when the supplier is registered or should be), rather than at the point of importation.

Under what circumstances should the overseas vendor charge Australia GST for low-value imports?

1. It is a B2C transaction, and the recipient is an Australian resident
2. The goods have a customs value of AUD 1,000 or less
3. The seller meets the Australia GST registration threshold
4. It is a direct B2C supply(no intermediation platform in the supply chain)

Practical Example: Low-Value Goods

An online vendor, with a place of business in Italy, is selling cellphone accessories to Australian consumers(B2C) through its own website. 

Product price: AUD 80
Shipping and Insurance costs: AUD 10
Total before GST: AUD 90
GST at 10%: AUD 9
Total charged to customer: AUD 99

In the cases when the overseas e-commerce vendor surpasses or is expected to go above the registration threshold, and it is required to register, the GST should be applied at the point of sale. The Australian customer should be aware of the GST that is imposed on the related supply via the billing details available through the website. 

GST and Customs Requirements for High-Value Imports 

Goods with a customs value above AUD 1,000 have a different tax treatment. GST and customs duties are generally collected at the point of import. Australian customs authority indicates that goods with a customs value above AUD 1,000 require an import declaration and may be subject to customs duties, taxes, and other charges at the point of entry. 

Practically, this means that the overseas vendor shouldn’t levy GST at the point of sale, because mainly in these circumstances the import GST shall be raised at the point of entry into the country. 

The GST in these circumstances is, in most of the cases, calculated on the value of the taxable importation. This will most probably be a sum of the customs value of the goods, customs duty, and potentially other taxes or levies, depending on the product. 

Practical Example: High-Value Import

Customs value of goods: AUD 1,200
Customs duty 5%: AUD 60
International freight and insurance: AUD 100
GST base: AUD 1,360
GST at 10%: AUD 136

Total import levies for this type of import are AUD 196, consisting of customs duty AUD 60, and GST at AUD 136. 

GST Compliance for E-Commerce Marketplace Operators 

Role of Electronic Distribution Platforms(EDP)

Australia’s GST rules can transfer GST accountability from the individual seller to the marketplace operator in cases when the supply is facilitated by the marketplace. The Australian Tax Authority(ATO) indicates that in most of the cases, where the marketplace facilitates the supply of digital products or low-value imported goods, the marketplace becomes accountable for GST instead of the underlying supplier.

This means that in many cases where the subject of the taxable supply is a low-value good or digital product, the marketplace operator, such as Amazon, eBay, Shopify Shop App, or the operator, becomes accountable for GST. 

Marketplace GST Responsibilities

When the marketplace becomes responsible for collecting the GST on the supply of low-value goods, the marketplace should have in place a tax calculator for these supplies at checkout. 

Even when the marketplace facilitator is responsible for GST collection for the underlying supply, the original seller shouldn’t neglect the following responsibilities that could entail GST accountability: 

1. Review its Australia-linked turnover
2. Conduct due diligence concerning the GST collection process orchestrated by the marketplace 
3. Reconcile marketplace GST reports with internal sales data
4. Track direct sales
5. Avoid double-charging GST where the platform has already collected it

Practical Example: Marketplace and Direct Sales

Overseas vendor sells the same product(low-value goods) through the Amazon marketplace and Shopify. 

For Amazon supplies, the marketplace collects and remits GST, while for Shopify sales, the vendor is accountable for GST when the threshold is surpassed. 

If the vendor assumes that Amazon’s GST collection covers all Australian sales, it may undercharge GST on Shopify sales.  If it applies GST again to Amazon orders in its own accounting, it may overstate GST liabilities. Correct reporting requires separate treatment by sales channel.

Fulfilment Models and GST Impact

Overseas Fulfilment 

In the scenario where goods are shipped directly from abroad to local customers, there is a different GST and customs duties framework applicable to the low-value imported goods and high-value imported goods.

For low-value goods, registered sellers or responsible marketplaces usually collect GST at checkout.

For high-value goods, GST and customs charges are generally collected at the customs.

The seller’s checkout should distinguish between these two scenarios.

Australian Stock or Local 3PL Fulfilment

If a vendor stores inventory in Australia, e.g., in a local warehouse, fulfilment centre, or 3PL facility, sales from that inventory are generally domestic supplies. In that circumstance, the vendor usually is obliged to register for GST under standard registration procedures. 

Holding stock in Australia entails sales connected to Australia, and vendors’ GST and Customs duties change when compared with the supply of imported low-value goods. 

Hybrid Fulfilment

Vendors that use both mechanisms for supplies to Australian customers should take into consideration that overseas shipments directly to customers, and holding stock in the country before making the supply, create different GST and customs treatments. 

1. For overseas low-value goods, GST is generally charged at checkout
2. For overseas high-value goods, import GST and customs duties are payable at the entry point
3. When the goods are in the e.g., local warehouse, stored before supply, when the supply is processed, we have a domestic supply
4. For marketplace sales of low-value goods, GST may be collected by the platform

Hybrid models require careful system configuration to ensure the correct GST treatment applies to each order.

Customs Duties and Landed Cost

Customs duty is a different type of levy from GST. Custom duties are collected by the Australian Border Force(ABF). When levied on the taxable supply (e.g., high-value imports), they can affect the GST calculation base.

Duty may apply depending on the value of the parcel,  tariff classification, product type, origin of goods, and whether a free trade agreement applies.

The ABF notes that goods over AUD 1,000 and some restricted goods, such as alcohol or tobacco, may be subject to customs duty, taxes, and import processing charges.

Sellers should review:

1. HS tariff classification
2. Country of origin
3. Available free trade agreement relief
4. Import processing charges
5. Freight and insurance costs
6. Whether the sale is Delivered at Place(DAP), Delivered Duty Paid(DDP)

How to Stay Compliant

The Australian GST regime for cross-border e-commerce vendors is continuously getting updated. 

The advisory role offered by 1stopVAT for these vendors goes from understanding the threshold exposure for registration, accountability for GST, assistance with the return preparation, and remittance of the owed tax.

Where we cannot manage your GST requirements directly, we have a great network of local tax agents who will take care of this. 

In addition to successfully managing your registration, we offer additional services for e-commerce sellers, such as: 

• Assistance with Tax Reporting(preparation of returns, filing, and remittance)
• Tax Advisory and Ongoing Tax Management
• Correspondence with Tax Authorities

Takeaway 

Frequently Asked Questions