The ATO has issued Law Companion Ruling LCR 2018/1, which covers the recently enacted measure to impose goods and services tax (GST) on supplies of imported low-value goods (ie goods valued at A$1,000 or less) from 1 July 2018. This measure was introduced to create a more "level playing field" for local retailers. The existing rules about GST on imports valued above $1,000 are unchanged. 

The ruling explains:

  • when a supply of low-value goods is connected with Australia;
  • when a supplier needs to be registered for GST;
  • how to calculate the GST payable on the supply;
  • rules to prevent double taxation of goods;
  • rules to correct errors or deal with changes in the GST treatment of a supply; and
  • how the new measure interacts with other rules under which supplies are connected with Australia.
Note that for ease of reference, the ruling uses the term "Australia" in place of "indirect tax zone" (the equivalent technical term used in the GST legislation).

The ruling explains that the entity that is treated as the supplier will be responsible for GST on the supply of low-value imported goods. This may be the merchant, but it can also be an operator of an electronic distribution platform (EDP) or redeliverer. 

The new measures do not change the requirements for registration. That is, a supplier is required to register if its current or projected annualised GST turnover equals, or exceeds, the GST turnover threshold (generally $75,000). The ATO says that the entity responsible for GST on offshore supplies of low-value goods must count the value of those supplies when determining whether it meets the GST turnover threshold.

Australian consumer law requirements 

Generally, Australian consumer law requires retailers to provide a price that is inclusive of GST, where GST is applicable. This may be difficult for offshore suppliers – how will they be certain that a supply of goods will be liable for GST?

The ruling offers the possibility of some relief by stating that if it is initially considered less likely that GST will apply to the supply, the supplier can instead display a message that notes the potential for additional taxes to apply. However, when offshore suppliers are aware that they are offering low-value goods for sale into Australia to consumers, the price displayed should be a GST-inclusive price. Indicators that this is the case would include situations where:

  • a website is advertising consumer goods in Australian dollars;
  • a "" domain name is being used; or
  • location services show the recipient is in Australia.

Supplies incorrectly treated as taxable supplies 

An adjustment event will arise if the supplier (or entity treated as the supplier) discovers that the supply should not have been a taxable supply because of information about either the nature of the goods or the recipient. Where the supplier has already included the GST payable on such a supply in its assessed net amount in a return, the amount will be "excess GST" for GST purposes. The excess GST will only be refundable to the supplier if either:

  • the excess GST has not been passed on to the recipient; or
  • the recipient has been reimbursed.

Where the excess GST was not passed on to the recipient, the supplier can request an amended assessment or claim a refund in a later tax period. Alternatively, where the excess GST was passed on but a reimbursement has subsequently been made to a recipient, the supply ceases to be a taxable supply and the supplier can make a decreasing adjustment.