Tax Reform - Key Points
The Australian government amended and passed regulations related to the GST amendments in 2017, with new provisions requiring that, from July 1, 2018, a Goods and Services Tax ("GST") of 10% will be collected on behalf of the consumer by the e-sales platform on which the item is traded for items of low value (less than or equal to AUD$1,000) that are imported into Australia. Services Tax (GST).
If you are selling on a platform such as Amazon, ebay, etc. in Australia, you do not need to register for GST and the platform will collect and report the GST to the Inland Revenue Department. If the online sales platform is only advertising your products (e.g. providing a link for consumers to purchase from your website), you will be responsible for collecting the GST, independent of the platform.
If you sell products directly from your personal or business website to customers in Australia and your revenue exceeds A$$75,000 in a 12-month period (if you sell products through a sales platform operator, the sales will not be counted towards the A$75,000 as a measure for GST purposes), you will need to register for GST tax with the Australian Taxation Office (ATO).
In this system, you collect the GST at the time of sale and then pay the GST tax to the ATO on your GST return. This is similar to the Value Added Tax (VAT) in China.
Unlike many other countries, GST is not collected on entry for low-value goods, and importers or individuals are required to pay GST, tariffs or other fees on entry for goods over A$1,000.
Fines Ordinance
Eligible businesses will need to register and pay the GST, and may be penalized if they fail to meet their obligations under the new legislation. Australia and China are both signatories to the Tax Treaty, which allows the two jurisdictions to share information.
Through collaborative vendor data (e.g. credit card transaction data) and extensive internet analysis, IRD was able to identify overseas operations affected by the new regulations.
If you fail to register or pay GST as required, the Inland Revenue Department can:
- Calculate the amount of GST you owe (using third-party information - such as bank information and customs data);
- Penalizing you for not registering GST as required charges interest on the tax not paid on time;
- On the condition that you fail to file a GST tax return with the Department of Revenue as required, issue you a notice of assessment for the unpaid GST tax plus a penalty of $75%.
Calculate GST
If you are required to register for GST, you must pay the GST charged at the time of sale, which is 1/11th of the price paid by the consumer in Australia at the rate of 10%. If the price includes shipping or insurance, the GST is usually calculated on the total price.
The amount of GST you need to collect on a sale is not based on the value in the customs file. For example, if you sell a phone to an Australian consumer for A$660 and you need to register the GST, you need to pay A$60 to the ATO on your GST return.
If you are selling a $1200 cell phone to Australia, you do not need to pay GST as it is not a low value item. Importers will pay GST at the border.
As long as you are aware that Australian GST is likely to apply to the goods being sold, Australian consumer law requires that the prices shown include GST.
Registration Type
If you need to pay GST, there are two ways to register for GST:
1. Simplified GST System (ARN)
If you are a non-Australian business, the easiest way is to register for the simplified version of the GST system. This is a secure and easy to use online platform that can be accessed through the ATO website. This method does not have an Australian business number and you cannot claim GST credits.
2. Standard Registration
This is a standard system used by Australian businesses and can be used to claim GST credits if you pay Australian GST on company purchases.
Registering for GST does not mean you have a permanent establishment in Australia that is subject to income tax.
Declare GST
After registering for GST, you will need to file a GST tax return with the ATO and pay the GST; the simplified version of the system is available for Chinese cross-border sellers.
For simplified GST system, the deadline for filing tax returns is:
Regarding the process, application materials and fees of registering the simplified version (ARN) of GST and Australian local company, Green Circle has a complete program, if you want to know more or need to register GST, please consult Green Circle's dedicated account manager.
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