RSM Australia

Australian GST: low value threshold (LVT) changes a step closer

Tax Insights

With a low value threshold (LVT) set at AUD$1,000, Australia has been very much at the ‘generous’ end of the global spectrum of GST-free imported goods, to the benefit of Australian consumers and the chagrin of Australian retailers.

After numerous reviews and investigations, the government introduced a bill in mid-February 2017 to change the law, and nothing moved until a Senate review committee released its report on 10 May 2017.  The committee recommended:

  • the bill be passed (although with some misgivings); but 
  • the commencement date be deferred until 1 July 2018.

The proposed model is a mish-mash: Australian GST will be payable by one of:

  • the foreign vendor/supplier (requiring Australian GST registration); or
  • freight companies or other logistics intermediaries; or
  • electronic distribution platform (EDP) operators.

The opportunities for confusion and double tax are clear, and because of other features of the law changes, opportunities for LVT GST-free importations continue to exist.

Australia following Europe following Australia

The European Commission proposed a similar model in November 2016, expanding the existing VAT collection system for remotely delivered electronic supplies to capture the supply of LVT goods sold through EDPs. 

Whilst it remains to be seen where Europe will ‘land’ on the issue, the (relative) success of the European VAT collection system on remote electronic suppliers would suggest the system will be expanded to cover low value imported goods sold via EDPs. 

And if Europe mandates this approach, the EDPs arguments against the Australian measures will lose cogency - EDP systems will have to be changed to satisfy the European laws, and changes to accommodate the Australian requirements will be piggy-backed.

For Australia, the question is no longer ‘if’ but only ‘when’. 

Given the short time to 1 July 2017 (the start date currently included in the bill), the government will need to decide its position very quickly.

At RSM we can help you stay on top of alerts and ensure you are kept up to date.

If you have any queries in relation to this article, please contact Craig Cooper or Tony Ince, alternatively, get in contact with your local RSM office today.

Take a look at other recent Tax Insights

RSM in Sydney - providing accountanting, auditors and consultants for sydney Businesses