From 1 July this year, the GST will be applied to imported goods valued below $1,000 – abandoning the existing exemption for such goods deemed “low value”.
The change will impact import businesses as well as Australian retailers that “drop ship” – which the ATO describes as “sales of goods that are located overseas at the time of sale and sent directly to consumers in Australia from an overseas source (for example, manufacturer, wholesaler or warehouse)”.
In a statement, the ATO warned that suppliers not already registered for GST will need to look at doing so if this change will take them over the GST threshold.
Businesses must be GST-registered if their GST turnover exceeds $75,000 within a 12-month period.
The change was announced by Treasurer Scott Morrison in mid-2017, which at the time he claimed “will restore integrity to Australia’s tax system to close down loopholes and prevent tax avoidance”.
At the time, however, My Business readers were at odds in their views on whether the measure is necessary.
“As an online retailer here in Australia, I think it’s just plain crazy that my competitors are all automatically 10 per cent cheaper than me. I have a 20 per cent margin to play with, so I can’t match the prices,” commented one.
“Any fiscal exemption is a Pandora box. It distorts competition or fiscal fairness,” said another.
Yet not everyone was convinced.
“The idea that this somehow creates a level playing field is bizarre. It’s essentially a trade barrier that perverts the concept of a GST. To the extent that such barriers assist local retailers then sure, it does that [but] at the cost of freer trade and more choices for Aussie consumers,” claimed one reader.
“I use Amazon Web Services in USA and this will make it more expensive. Local Australian hosting is too dear or of a poor quality and non-competitive. Fix the non-competitive companies rather than tax companies who can cease trading with Australia if they want to by blocking Australian IP addresses,” another said.