GST charged on goods bought online from overseas

Buying overseas goods online? Be prepared to pay an extra 10% GST tax


Tax Advice

Buying overseas goods online? Be prepared to pay an extra 10% GST tax

The recent decision by Amazon to restrict Australians’ access to their US websites has sparked curiosity and concern. This move comes on the heels of the implementation of a 10% GST overseas goods online tax on goods purchased online from overseas, effective from July 1st. Previously, such imports were exempt from GST overseas goods online if their value was below $1,000.

Under the new GST regulations, overseas retailers with turnovers exceeding $75,000 will be subject to this tax. However, smaller businesses may be exempt from this requirement, potentially impacting around 5,000 companies. The Australian Taxation Office (ATO) has already initiated correspondence with affected overseas taxpayers, indicating the firm enforcement of these changes.

However, the efficacy of this tax collection remains uncertain. The new law mandates that retailers like eBay and Amazon collect GST overseas goods online at the point of sale, known as the vendor collection model. Yet, the ATO lacks jurisdiction to compel overseas companies to comply with these regulations, raising questions about enforceability.

The success of this compliance largely depends on the cooperation of overseas operators, particularly from countries like the USA and China. Without robust enforcement mechanisms, these countries may not readily assist the ATO in tax collection efforts.

Both eBay and Amazon have expressed concerns about these changes. Amazon announced its decision to block Australian shoppers from accessing its US website starting May 31, 2018, citing regulatory challenges. Meanwhile, eBay seems to have adapted to the vendor collection model relatively smoothly.

Despite these challenges, the ATO continues to push for compliance with the new regulations. As the landscape of online retail taxation evolves, navigating these changes becomes crucial for businesses and consumers alike.

For further assistance or inquiries regarding these regulatory changes and their implications, feel free to contact us today!




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