In 2017, the Australian government passed new legislation on the Goods and Services Tax (GST). The law aims to ensure that both Australian goods and foreign low-value products are subject to the same tax regime.
Please read through the following questions to understand how the new GST law may affect your online sales.
In this article:
As of July 1, 2018, GST on low-value goods applies to the products with a customs value of less than or equal to AUD 1,000 that are sold to the customers from Australia.
Sellers that are subject to the new law will need to:
- register with the Australian Taxation Office (ATO),
- charge and collect GST on sales of low-value products to Australian customers (unless they are GST-free or sales of alcoholic beverages and tobacco products),
- lodge returns with the ATO and make payments to them.
The new tax regime affects overseas businesses that sell low-value goods to Australian consumers (B2C sales).
The new tax legislation does not apply to sales of low-value imported goods made to Australian GST-registered businesses (B2B sales).
If you sell to Australian consumers (B2C):
- You need to register your business with the Australian Taxation Office (ATO) and meet reporting, payment and record-keeping requirements.
- You need to charge 10% GST on sales of low-value goods.
To do that in your Ecwid Control Panel → Settings → Taxes, you need to set up a manual 10% GST rate on low-value products for Australian zone. The option Include tax in product prices should be enabled.
- You should lodge returns to the ATO.
- An item you sell is a tobacco product, an alcoholic beverage or is worth over AUD 1,000.
- You sell multiple goods with a total customs value of more than AUD 1,000 in a single order.
If you sell to Australian GST-registered businesses (B2B):
- You need to collect Australian Business Numbers (ABN) at checkout in your store to confirm that the purchase is made by a GST-registered business.
To do that you can either rename an existing field in the address form or add a custom one with the help of Checkout Questions application for Ecwid.
- You do not need to charge GST on sales made by GST-registered businesses.