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Low Value Imported Goods (LVIG) - GST Impact

Posted by Rhodes Docherty on 29 July 2018

From July 1, 2018, new legislation has come into effect that imposes GST on goods that are deemed to be Low Value.

This means any product, such as books, jewellery, electronic devices, sports equipment, cosmetics, or clothing will incur a 10% GST on the price of the item, regardless of its value, when imported into Australia.

Prior to this legislation, imported goods worth less than A$1,000 were GST free.

Read on to find out more about what low value goods are and if you are a supplier of these, what this new legislation means for you.

What is the deFinition of Low Value Imported Goods?

Low value imported goods are those with a customs value of A$1,000 or less.

Overseas vendors who sell more than A$75,000 of low value goods to Australian consumers are now required to register for GST and collect and remit GST on low-value goods to the ATO.

Why was this new legislation introduced?

The Government is ensuring that all Australian businesses particularly, small retailers are not unfairly disadvantaged by the current GST exemption that applies to imports of low-value goods.

Currently, Australian retailers are required to charge a 10% GST on all goods they sell to consumers, regardless of the price of the item.

However, imported goods under A$1,000 have been exempt from GST charges.

The new GST laws ensure that low value goods imported by consumers in Australia are treated in the same way as goods that are sold locally.

It means imports of goods worth less than A$1,000 are no longer be exempt from the tax.

Which businesses are impacted by this legislation?

If you or your business either makes or facilitates sales/deliveries of LVIGs to Australian consumers, then you will be subject to GST on those transactions.

Typically, entities that will be affected include:

  • Sellers
  • Operators of online marketplaces (i.e. operators of online services that allow entities to make supplies to end-users)
  • Re-deliverers (i.e. entities that assist Australian consumers acquire goods from overseas)

GST will now need to be collected If a business's Australian GST turnover meets or exceeds the GST threshold of A$75,000, including the value of LVIGs.

Are some LVIGs GST free?

Some goods, such as certain medical appliances, foods, or education course materials are GST-free.

Where these goods are imported into Australia, no GST will be payable and the value of these goods will not be included in calculating the GST registration threshold.

While the Government is doing its best to simplify the registration, collection and reporting process for LVIGs, care must be taken to ensure compliance and proper reporting.

If you and your business fall into the definition of LVIGs sellers, then we strongly advise you consult with your accountant to ensure you take the right steps.

We'd be more than happy to answer any questions you have on this new legislation.

Contact us today or call us on (02) 998 4033.

Author: Rhodes Docherty
Tags: GST
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