GST on Imports in Australia: How It Works, How to Calculate It & How to Pay

Import of products into Australia can also allow companies to access new customer bases and new suppliers. But you should know the taxes before placing your order. The new GST on imports will likely impact shipping, customs clearance and the overall price of goods. This knowledge of the process allows importers to budget ahead of time and avoid delays. This guide covers import GST in Australia, how to work out import GST, how to pay import GST and common import GST errors.

What Is GST on Imports in Australia?

Most goods and services are subject to Australian Goods and Services Tax (GST). GST is charged on goods you import from another country based on their value, type and how you import them.

The GST on imports depends on whether the overseas buyer has already paid GST on the goods, or whether GST is payable on arrival in Australia. So when importing goods businesses have to comply to the rules.

How Much Is GST on Imported Goods?

The standard GST rate is 10% on most taxable imports. It is computed on the value of taxable importation which includes the value of the goods, customs duty, international transport and insurance.

Who Collects It: ATO vs Australian Border Force

The Authority responsible for GST payments in Australia is the Australian Taxation Office. At customs, the Australian Border Force collects and pays GST before releasing the goods. If you are buying goods from foreign sellers and online portals, you may have to temporarily impose GST.

How GST Applies to Imported Goods: Under vs Over $1,000

The customs value of a shipment helps determine how GST is collected on imported goods.

• Low value goods ( at $1000 or less) If the goods are low value goods that are eligible goods purchased by an Australian consumer, the GST may be collected by the seller or marketplace at the point of sale. Typically, these products are not taxed at the border, but exceptions apply.
• Goods above $1,000 in value: Usually you’ll have to make an import declaration.The importer may have to pay GST, customs duty and other levies to release imported goods.

The $1,000 limit is based on the customs value, not necessarily what you paid at the checkout. There are special rules for alcohol and tobacco.

How to Calculate GST on Imported Goods

First calculate the value of the imported goods for tax purposes.

Formula:

GST = 10% × (Customs value + Customs duty + Eligible international transport and insurance + Applicable wine tax)

For example, suppose an imported shipment has these costs:

Other Charges That Arrive With GST on Imports

GST is not the only cost in importing goods. If your shipment is particularly large, extra costs may apply such as:

• Import tax – This varies by product, tariff line and trade agreement.
• Import processing charges – May be charged if you lodge an import declaration.
• Freight and insurance – These expenses can be included in GST calculation
• Customs broker fees – Where a customs broker is used to clear the goods.
• Biosecurity inspection or treatment fees – May be charged on goods requiring inspection or treatment.

When and How Do You Pay GST on Imports?

Usually, you settle import taxes when you collect the goods from customs. The procedure depends on the shipper and the type of goods shipped to Australia.

In most cases, importers can take the following steps:

• Check the customs value and classification of their goods.
• Prepare necessary shipping and import paperwork.
• Verify the goods and services tax, duty, and processing fees due.
• Pay through the relevant customs or clearance system.
• Maintain payment records and invoices for your accounts.

Can You Claim GST Credits on Imported Goods?

If you are a GST-registered business you may be able to claim GST credits for eligible imported goods you use in your business. You must have appropriate documentary evidence of the importation and GST payment. They must meet ATO requirements.Personal purchases are generally not eligible for GST credits.

Which Imports Are Exempt From GST?

Certain products might be GST-free or exempt from the GST under Australian law. Some of these products are –

• Basic Food
• Medical and Health Goods
• Disability Support
• Precious Metals

GST on Imports for eCommerce Sellers

Businesses engaged in eCommerce need to understand the GST implications for products sold to customers in Australia. As of 1 July 2018, eligible goods with a low value when imported into Australia may be subject to GST at the point of sale, when sold to consumers in Australia. Online marketplaces and overseas sellers that meet the registration requirements may be required to collect it.

Sellers need to check GST registration requirements, invoice information, product pricing, shipping costs.Clean records will make it easier to report taxes and avoid inappropriate charges.

Common GST on Imports Mistakes to Avoid

These are the common mistakes to avoid to reduce errors for importers:

1. Assuming every shipment below $1,000 is GST-free.
2. Failure to identify eligible freight, insurance or customs.
3. Paying GST twice because you didn’t check checkout records.
4. Using incorrect product descriptions or customs values.
5. Not maintaining Invoices and Import Documents.
6. Overlooking customs duty and processing charges when setting a budget.

Checking the rules before shipping can help avoid extra costs and clearance delays.

How iSend Helps With Imports, Customs and GST

International shipments involve paperwork, delivery arrangements, and customs requirements. Businesses can benefit from working with a logistics provider to plan transport and understand how to import goods into Australia.

iSend allows businesses to leverage shipping support for their imports. Go through the services provided and ensure who will be taking care of customs clearance, GST payment and other charges before you arrange the shipment. Communicate clearly to reduce confusion and avoid delivery delays.

GST on Imports FAQs

What GST is charged on imported goods?

GST payable at standard rate on a taxable import is 10% of the value of the taxable import. This can include the customs value, duty, international transport, insurance and the relevant excise duty on wine.

Is GST charged on shipping and insurance for imports?

Yes, wherever eligible, the customs value for the purpose of calculating the GST payable on imported taxable goods shall include international transport and insurance costs.

Who pays GST on imports, the buyer or the seller?

In most cases, the goods are taxable on import, and the importer pays the GST. If your partner is an overseas seller or online marketplace, and sells goods with a value of less than $1,000 where you live, GST may be applied at checkout.

How do I pay GST on import goods?

GST is usually paid at customs clearance before goods are released for importation. It can be added to the checkout cost of a qualifying low-value sale.

Can I claim GST paid on imports?

A GST-registered business may claim a credit if it uses the goods for a creditable business purpose and meets the relevant requirements.

What is the deferred GST scheme?

The deferred GST imports scheme allows eligible, approved GST-registered importers to report GST on imports through their activity statements instead of paying it at the border.

Will I be charged GST twice on an import?

It can happen if GST is collected at checkout and also collected at the border. Retain the evidence of the first payment. If you paid GST twice, contact the seller for a refund. The ABF said refunds for double GST on low-value goods had to be claimed from the vendor.

Conclusion

Businesses need to know about GST on imports to Australia so they can work out the costs, prepare documents and avoid mistakes with payment. Check GST rules, customs duty, freight charges and clearance requirements before shipping. With some planning and the right logistical support, bringing in goods into Australia isn’t that hard to manage.