Incorrect application of GST and low value goods imported into Australia

New GST rules dealing with low value goods imported into Australia commence from 1 July 2018. The introduction of the changes may mean that clients pay GST on purchases that were not previously subject to GST. However, it is important to note that business clients should not be charged GST when purchasing low value goods for their business use where they provide their ABN and state that they are registered for GST to the overseas supplier.

If a client is charged GST incorrectly, they should seek a refund from the supplier by providing their ABN and stating to the supplier that they are registered for GST. However, if a client is incorrectly charged GST on goods they import for their business, they should be entitled to a GST credit if:

  • They would otherwise be entitled to claim a GST credit;
  • They have a valid tax invoice (showing the supplier’s ABN) or the amount they paid is A$82.50 or less;
  • The supplier has not reimbursed the client for the GST charged on the sale (if the client later receives a reimbursement, they will need to make an adjustment to repay any GST credits claimed), and
  • They have no information to suggest that the GST has not been paid to the ATO by the supplier.

Avoid being incorrectly charged GST from overseas

GST on low value goods imported into Australia commences from 1 July 2018; Low value imported goods are physical goods – excluding tobacco, tobacco products and alcoholic beverages – with a customs value of A$1,000 or less.

GST Low Value Imports – Information for business purchasers

If you are registered for GST, then GST will not apply to the sale of low value goods that you import for use in your business in Australia. If you are not registered for GST, GST can apply to these purchases.

To find out more about the implication of GST on specific items for your business purchase or goods imported, come and speak to us Tax Ideas Accountants & Advisers   Tel: (02) 8318 1545

Posted in News & Events, Tax Updates.