GST Exemption for overseas online purchases soon to be a thing of the past

For those of you who are frequent on line shoppers on overseas websites, last Friday’s announcement from the Federal and State Treasurers to scrap the GST exemption for imported goods and services purchased for less than $1,000 would have been disappointing news.

As of 1 July 2017, GST will be payable on all imported goods and services purchased from overseas.

The GST will be collected by the overseas vendor and remitted to the ATO. The idea behind this is to ensure that your goods will not have to be stopped by Customs and Border Protection for GST collection therefore allowing a more streamlined process and relatively low administration costs. There is however, no guarantee that the overseas vendor would be correctly remitting the GST to the ATO and the cost of auditing such an entity would likely be prohibitive. In any event, it will require a significant level of voluntary compliance by the overseas vendor as it will be difficult to measure and even harder to enforce.

To be expected, this announcement has been welcomed by Australian retailers and business groups, who have for years conveyed their frustration with trying to compete with overseas online vendors.

Whilst the removal of the GST exemption is an effort to try and level the playing field for our domestic retailers, time will tell whether the domestic retailers will notice a change in consumer habits, as one would have thought the strength of the Australian Dollar is the key factor in determining a consumer’s purchasing decision – not the GST that is payable.