Understanding exemptions to the low value GST law
The Australian law surrounding low-value imported goods can be kind of confusing. Not all overseas retailers are required to collect and remit GST since it depends on how much they import into Australia on an annual basis. If the retailer exceeds a certain threshold, they will be required to collect and remit GST on every order. If they do not exceed this threshold, then the law passed on July 1st, 2018 does not apply. Rest assured, if you are not required to pay GST at time of checkout, and the order is under A$1,000 you are not liable for GST when the goods are imported into Australia.
As of July 1st, 2018, if you sell over A$75,000 to Australian customers within a 12-month period, you will be required to remit GST.
Decoding GST on low-value imported goods
The Federal Parliament of Australia passed legislation for GST on low value imported goods as an attempt at leveling the playing field for Australian domestic businesses that already have to charge GST on all purchases. However, the law does not only target non-Australian companies, it also targets Australian merchants that sell and drop-ship goods from other countries, allowing them to circumvent collecting and paying GST.
Currently, all purchases over A$1,000 are already subject to GST upon entry into the country. The new law does not change the [de minimis] value of A$1,000. If Australia were to lower or eliminate the A$1,000 de minimis, it would require the collection of GST from the receiver. Australia is unique when compared to other countries, because they are shifting GST collection and remittance responsibility to the seller vs. the receiver, even if they are located outside of Australia.
You are required to register for GST in Australia if you are selling over A$75,000 annually. The total is inclusive of product sales, not including the GST. If you are a US retailer, keep in mind that a currency exchange rate of 1 AUD = 0.75 USD would require AU GST registration if you sell over $56,000 USD annually to Australia.
The exact registration requirements are based on two different levels of “turnover”. If you total over A$75,000 in either of the two circumstances, you should register.
Current GST turnover: The turnover for the current month, plus the trailing 11 months, is over A$75,000.
Projected GST turnover: The turnover for the current month and what you believe the next 11 months will add, is over A$75,000.
We recommend registering for GST if your current month and trailing 11 months of sales were equivalent to A$65,000 or about $48,000 USD.
How to register for GST
For most, US retailers will not have an Australian business number (ABN). You do not need one because a simplified GST Registration will allow you to register and pay Australian GST.
As a non-resident registered through Simplified GST:
- You do not have to prove your identity
- You use an ATO reference number (ARN) instead of an ABN
- You cannot issue tax invoices or adjustment notes.
- You cannot claim GST credits
- You must lodge your GST returns and pay GST quarterly.
- You can pay electronically via SWIFT bank transfer or credit card.
Registration is a two-step process.
- Get an AUSid: To access the simplified GST registration form, you will need a secure credential called an AUSid. Simply download the AUSid application and set up your account to securely access the online platform for simplified GST whenever you need to. If you need an AUSid, go to ato.gov.au/AUSid
- Register for simplified GST: Select “Register now” to access the online services for non-residents with your AUSid and register for simplified GST.
Calculating and collecting Australian GST with Zonos
If you are required to collect GST on low-value orders and have a registered AUSid, you will update your AUSid inside of your account settings with Zonos. By updating your account with an AUSid, your Zonos Checkout or API will automatically start calculating 10% GST on all orders to Australia, even those under the de minimis of A$1,000. Also (by default), Australian customers will be required to pay both GST and duty at the time of checkout. They will not have an option to pay GST or duty at the time of customs clearance.
Zonos Hello will keep your Australian shoppers informed
Zonos Hello provides a simple and straightforward way to let your Australian shoppers know they will pay GST at time of order, and not at the time of customs clearance. Zonos Hello will indicate the following when Australian Shoppers arrive.
In Australia, you can spend up to 1000 AUD and not incur any duty on your order. GST is 10% and due on any order above 1000 AUD. You are responsible for duties and taxes that are collected upon delivery.
Avoid double taxation
If you are now collecting GST on orders under A$1,000 AUD, we do not recommend managing a two-tiered system in which you collect on orders under A$1,000 and let your customer pay when over A$1,000.
Below is an example of a problem with the two-tiered system:
The product value on an order was $740 USD, just below A$1,000. If the commercial invoice is listed at $740 USD (and the currency rates change from the time you took the order to the time the shipment cleared customs), it may now be valued above A$1,000. In this scenario, you would have collected 10% GST at time of checkout and the customer would have to pay 10% GST again when the shipment clears customs.
Remember, when an order exceeds A$1,000, Australia will collect GST at time of customs clearance. If you collect GST at time of checkout (and you do not indicate that you already collected GST upon processing your customs documentation), the customer will be double taxed - by you and by customs.
There are two ways to avoid double taxation.
1. Send all orders over A$1,000 DDP (Delivery Duty Paid).
DDP, also known as billing the duties and taxes to the shipper, will ensure GST and duty are billed back to you by the carrier. You must be sure to send the shipment via a carrier and service level that supports DDP.
If the order is sent DDP (and the customs documentation does not reflect you collected GST at the time of the order), you will be billed by the carrier for GST and duty. This means you would not remit GST back to the ATO on orders over A$1,000, because you paid it via the carrier.
2. Indicate on customs declarations you collected GST.
To pay GST on all orders both under and over A$1,000, you can insert your GST registration number on the customs declaration statement and provide a receipt that you already charged GST on the order. However, this will only ensure the GST is not charged to the importer; it does not mean the importer will not get billed anything. If you only put your GST registration number, and do not send the shipment DDP, the importer would be charged duty but not GST.
Zonos recommends sending your shipment DDP and including your GST number, proof of GST colelction, and order confirmation to the customer within the customs declarations (on shipments to Australia). This ensures your customer is never charged at the border for GST or duty. It will also simplify the quarterly GST payments to the ATO by paying GST on all orders, not just those under A$1,000.
When and how do I register?
If you need to register, you can get your AUSid on the ATO website.
What if I don’t sell over A$75,000 in a 12-month period?
For many small businesses, you will not need to register for GST. If you are not registered, Zonos Hello will inform Australian shoppers they will not have to pay GST at time of order or at time of delivery if their cart total is under A$1,000. When the Australian shopper arrives at checkout with Zonos Checkout or if your checkout is using the Zonos API, the shopper will not be required to pay 10% GST on the order.
If a shipment goes USPS, do I still need to collect GST?
Yes - once you have your AUSid, you need to collect GST on all orders, including those shipped with the USPS. However, the USPS does not have a DDP service - so if the orders exceeds A$1,000, Zonos recommends using an express carrier like UPS, DHL, or FedEx and sending the shipment DDP.
How do I best inform my Australian customers about the change?
Zonos Hello will automatically inform all Australians of the change when they arrive at your website and let them know they will be required to pay GST at the time of their order.
Duties and taxes
Due to the legislation passed on low value imported goods to Australia, 10% GST will be added to your order at the time of checkout. You will not be required to pay GST at time of delivery. For your convenience (and if applicable), duties and any associated import charges will also be added to your order.
Will you inform me if I need to register?
Yes - if you are a current customer or signing up with Zonos, we will inform you if you need to register.
When should I start calculating and collecting GST through the Zonos Checkout?
Once you update your Zonos account with your AUSid, Zonos will automatically assess the additional 10% GST.
Didn’t an Australian GST law go into effect in 2017?
Yes - on July 1st, 2017, an earlier change was already implemented on imported services and digital goods. If you only sell physical products (like most eCommerce companies that work with Zonos) and you have received a notice from the ATO to pay GST on your eCommerce orders since July 1st, 2017, be sure to contact them directly to let them know you do not sell services or digital products. You will not have to remit GST on your eCommerce sales from before July 1st, 2018. You can contact the ATO (Australian Tax Office) at AustraliaGST@ato.gov.au.
How do I log in to AUSid?
To log in to AUSid, you need the following:
You must have downloaded the AUSid application to your computer. It works for both Windows or Mac. To download the application, go here.
You must have registered previously and obtained your username and password.
- Go the AUSid login page and copy the reference number.
- Enter your username and copy the reference number.
- Open the downloaded AUSid application on your computer and paste in the reference number.
- Enter your password into the AUSid application.
The session can expire quickly so be sure to already have your AUSid application open before entering your username.