Tax Advice

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

Wonder why Amazon has blocked Australians from their US sites?  It is because from 1 July, goods bought online from overseas will incur a 10% GST tax. Up until now, such goods were GST-free if worth less than $1,000.

The new GST rules will apply to overseas retailers with turnovers of more than $75,000. So if your overseas seller has a very small business, they may not have to pay the tax.

There are potentially 5,000 impacted companies. The ATO has sent letters to affected overseas taxpayers.

But whether the ATO can collect this new tax is questionable. Under the new law, retailers such as Ebay and Amazon would have to collect GST at the point of sale and then pay it to the ATO (vendor collection model).  The ATO is powerless to force the companies to do this as these companies are located outside ATO’s jurisdiction.

This kind of compliance is largely reliant on the goodwill of overseas operators. Countries like the USA and China will not enforce this on behalf of the ATO unless there is a good reason to do so.

Both eBay and Amazon previously indicated that they may have to block Australian buyers due to the changes when it happens.

Amazon will block Australian shoppers from its US website from May 31, 2018.

Nevertheless, rival online seller eBay appears to have managed to implement the vendor collection model without much trouble.




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