To get In touch - Call 02 6925 7775

GST Collection for Overseas Business

You may have seen some articles lately decrying the Australian Government’s efforts to implement GST collection on overseas purchases under $1,000 starting on the 1st of July. With many foreign business and advisors stating that they could simply boycott Australian customers.

GST on Overseas Services

GST on Overseas Services is nothing new, Adobe is one of the more recent additions to this group. It started paying back on the 1st of December 2016. Here at Concept Bookkeeping we use the e-signature functions to streamline the collection of authorities for BAS and IAS. And chances are that any business in the photography, marketing and advertising, website design, and conceptual art fields has a subscription to a range of Adobe products, charged monthly. For example a Creative Cloud for teams runs at $79.99 per month GST exclusive. Add GST and that is $87.99.

Over a year it comes to $95.99. So it pays to keep on top of these Overseas Businesses now paying GST.

 

It was not the first international company to start paying GST, that distinction goes to Google, who started charging GST back in November. And considering GSuite and Google AdWords are widely used in business it will only be so long until they get Facebook. Which so far is still GST Free.

News about international companies to start charging GST to customers is only going to increase leading up to the End of Financial Year.  For example, Steam Games will be paying GST from the 1st of July. I didn’t see that one coming.

The Big Three Electronic Distribution Platforms

GST
Now the problems that the Australian Government is coming against regarding Overseas Business like Ebay, Aliexpress, and Amazon complicates the collection of GST. This is largely due to the fact that these business are a electronic distribution platform (EDP) for small vendors to sell products. While it is easy to say that Ebay will have a registration turnover of A$75,000, it is not the same for a man clearing out his shed in America. His turnover is unknown.

The responsibility of paying the GST is landed on the EDP. Which they are not too happy with. Is Ebay expected to on-charge this GST to Australian customers at the point of sale, splitting this payment between the sale price and a GST collection account. Will we be seeing a monthly GST bill from Ebay? Currently the sellers are responsible for their tax obligations, and the prices must include GST if you are required by the ATO to charge GST. How they collect the GST?

GST Collection at the Post Office?

The most likely method of GST collection that Australian customers be stranded will be the much maligned English method. The GST being collected by the Post Office. Possibly one of the easier

English Post/Tax Office

systems to police, provided that people state the correct value of the products and don’t write “Gift” on the package. Which I’ve personally seen for many packages I’ve received from the UK, retailers have become quite cautious about declaring goods, believing that customers are more likely to return if they get reduced tax perhaps.

 

Simplified GST Registration System

The Australian Government is welcoming non-resident suppliers to register in the existing full GST registration system, or the simplified GST system for non-residents. The Simplified GST registration system details are currently not available yet.
Many people will be watching this unfold up to the start of July. Myself with crossed fingers against Ebay, Aliexpress and Amazon boycotting Australian consumers. I may just own a brick or two.

Worried about your online shopping. These websites will help inform you on the upcoming changes

https://www.istillcallaustraliahome.com/blog/the-4-biggest-mistakes-australians-make-when-sending-gifts-to-the-uk-and-how-to-avoid-them
https://www.gov.uk/goods-sent-from-abroad/tax-and-duty
https://www.ato.gov.au/Business/International-tax-for-business/In-detail/Doing-business-in-Australia/International-taxation-of-goods-and-services-supplied-to-Australia/
https://www.ato.gov.au/Business/International-tax-for-business/In-detail/Doing-business-in-Australia/New-Australian-law-applying-GST-to-imported-digital-products-and-services/?anchor=Servicesanddigitalproductscoveredbytheme#Servicesanddigitalproductscoveredbytheme
http://pages.ebay.com.au/help/policies/seller-tax.html
http://www.heraldsun.com.au/business/companies/ebay-could-shut-down-or-reduce-sales-in-australia-if-gst-is-applied-to-importers/news-story/e0bb7a3aebbfcf9cdb70976a1eb14a2c