Treasury Laws Amendment (2017 Measures No. 1) Bill 2017: Applying GST to Low Value Imports
Tuesday 8 November 2016 @ 11.23 a.m. | Taxation
On 4 November 2016, the Federal Government released an exposure draft for the Treasury Laws Amendment (2017 Measures No. 1) Bill 2017 (the draft Bill) which aims to amend the goods and services tax (GST) law to give effect to the 2016-17 Budget decision to apply GST to low value goods imported by consumers.
Background to the Bill
According to the explanatory notes, currently, GST is payable on taxable supplies and taxable importations. Generally, for a supply to be a taxable supply, it must, among other things, be connected with the indirect tax zone (ITZ) (broadly, Australia, excluding those geographic areas where the GST does not apply, such as the external Territories).
Under s 9-25 of the A New Tax System (Goods and Services Tax) Act 1999 (CTH) (the Act), supplies of goods are connected with the ITZ if the goods are:
- delivered in or made available in the ITZ (domestic transactions);
- removed from the ITZ as part of the supply (exported); or
- brought to the ITZ and the supplier is the importer.
These rules currently do not apply to supplies of goods outside the ITZ unless the goods are brought to the ITZ by the supplier.
Amendments in the Bill
The Schedule to the draft Bill amends Division 84 of the Act to make supplies of goods valued at $1,000 or less at the time of sale connected with the ITZ if the goods that are supplied are brought to the ITZ with the assistance of the supplier. This ensures that such supplies are subject to GST, consistent with equivalent supplies made within Australia.
According to the explanatory materials, the intent is that low value goods imported by consumers will face the same tax regime as goods that are sourced domestically.
The reforms would:
- make supplies of goods valued at $1,000 or less at the time of supply connected with the ITZ if the goods are, broadly, purchased by consumers and are brought to the ITZ with the assistance of the supplier;
- treat the operators of electronic distribution platforms as the suppliers of low value goods if the goods are purchased by consumers and brought to the ITZ through the platform;
- allow non-resident suppliers of low value goods that become connected with the ITZ because of these amendments to elect to be limited registration entities; and
- prevent double taxation by making importations of goods non-taxable importations if the supply of the goods is a taxable supply as a result of these amendments.
According to the explanatory materials, these reforms, if passed, would come into effect from 1 July 2017.
Effects for Consumers
GST will only be payable where the goods are purchased by a consumer. In general, a purchaser can confirm that they are not purchasing the goods as a consumer by providing their ABN and declaring that they acquire the goods for the purpose of their business.
According to the Q&A materials, From 1 July 2017, when a consumer buys low value goods online or by telephone from an overseas vendor they are likely to be charged GST of 10 per cent on their purchase, including delivery costs. The delivery of goods will occur in the same way as happens now.
If the consumer buys several goods together, they are delivered together and the total value of the goods is over $1,000, then GST and customs duties will apply to that importation at the border, as it does now.
Final submissions on the draft Bill to the Department of Treasury close on 2 December 2016.
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Sources:
Treasury Laws Amendment (2017 Measures No. 1) Bill 2017 and draft materials as reproduced in TimeBase LawOne
