Australian shoppers will need to make the most of buying imported goods online before July 1, 2018, when the federal government plans to amend the Goods and Services Tax (GST).
The Australian Taxation Office (ATO) said that it will impose a 10 percent GST on all imported products worth below $1,000 by that time. GST does not currently apply to purchases worth less than this amount.
Taxing Products and Services
The government originally planned to implement the amended GST in July 2017, but it decided to extend a one-year reprieve to allow a review by the Productivity Commission. The investigation has worked to determine the best ways to collect GST on low-cost online purchases.
It remains uncertain whether the international seller or local retailer will cover the new tax. However, you should expect that the cost of the additional tax would be passed on to customers. For instance, a one-year subscription to Netflix’s basic package may increase to more than $118 from roughly $108, if the amended GST rolls out as scheduled next year.
If you have been considering to apply for clothing or an embroidery franchise, it may be wise to ask a consulting firm on how the new tax will affect your venture. The ATO said that businesses with a turnover of at least $75,000 will need to register for GST.
Some of the reasons for the new GST include the prevention of double taxation and provide foreign suppliers with an option to sign up for a streamlined registration and reporting system. Tax collection for imported goods worth more than $1,000 remains the same, according to the ATO.
Aspiring and existing retailers have more or less six months to review their business structure for compliance. But Australian shoppers should brace themselves in case online products and services become more expensive in the second half of 2018.