UK retailers wishing to explore the lucrative avenue of shipping to Australia are now obliged to negotiate new import tax laws. Starting on 1st July 2018, the Australian Goods and Services Tax (GST) applies to consumer sales of low value goods imported by consumers into Australia.
According to figures from the Office for National Statistics, Australia was the UK’s 16th largest export market in 2016, with £8.6bn worth of goods and services accounting for 1.6% of total UK exports. Australia’s new GST is designed to give the country’s domestic businesses a level-playing field in recognition of the continued growth of online sales.
How Does GST Impact Shipping to Australia?
GST applies to any business that sells and ships more than A$75,000 of taxable supplies (including low value goods) a year to consumers in Australia. These rules also extend to electronic market place providers (or “electronic distribution platform” providers such as eBay) and goods “re-deliverers” (such as those that allow goods to be delivered to them from the seller within the sale jurisdiction before shipping them to Australia).
Such service providers are deemed to be the seller of the low value goods, the sale of which is then deemed to be connected with Australia and the GST liability will move to these service providers. The threshold is independent of the delivery channel (postal or freight).
Previously, imports of goods to Australia worth less than A$1000 were exempt from GST. Under the new legislation clothing, books, electronic devices and sports equipment are among the goods subject to the tax, and Australian consumers must pay 10% GST on all online goods bought from overseas. As a barometer, Australians spent around $40 million on these items online in the last financial year.
How Will This Affect UK Retailers Shipping to Australia?
For UK retailers considering international delivery, sizing up new markets is the exciting part; dealing with local-country tax and duties is less than thrilling.
Certainly, for smaller businesses, time and effort spent dealing with the detail of tax is considerable. Recent reports estimate that, in the UK, managing VAT compliance equates to an average of six working days annually. The Australian GST may not be as complex in comparison, but such matters demand the attention of staff whose focus could be better employed elsewhere.
The new GST ruling places an administrative burden on overseas retailers looking to ship to Australia. These businesses are now required to:
- Register for GST
- Charge GST on sales of low value imported goods
- Lodge returns and remit the GST to the Australian Taxation Office (usually on a quarterly basis)
Retailers must also declare the 10% GST on receipt and commercial invoices to consignees. As with any tax process, there is pressure to ensure compliance, with penalties for businesses that don’t comply. While the Australian Tax Office (ATO) is expected to be cooperative during this transitional period, it has affirmed it will pursue those foreign sellers that do not attempt to comply in order to collect unpaid GST plus penalties.
How Can UK Retailers Address this Situation?
Forward-thinking retailers understand the complexity of the postal market and choose to partner with expert third-party delivery suppliers, like P2P, who are highly experienced in navigating international duty and tax procedures.
Looking at shipping to Australia specifically, the best suppliers for your business will simplify the process, initiating registration for GST and supporting you through the completion of this potentially complex process.
Once done, your business will be provided with the necessary GST reference number to benefit from the profitable Australian market. Your supplier will then ensure that you are 100% compliant and, beyond registration, will manage all ongoing reporting.
The onus is on retailers in the UK and beyond to ensure that additional information concerning the supply of low value goods is included within customs documentation at the time the goods are imported into Australia. Again, your supplier should be able to manage this procedure accordingly.
Your supplier then invoices you separately for the 10% GST sum and manages the equivalent payment to the ATO on your behalf.
Unlock Your Potential with P2P’s International Delivery Solutions
Any changes to legislation relating to delivery can be off-putting to UK retailers looking to broaden their horizons – the GST in Australia is just one example. But there is no need for these ambitious businesses to go it alone.
Working with P2P can quickly and efficiently open up new markets for your company, with the administrative burden transparently handled by our logistics experts. This allows you to focus fully on driving sales and growth within your business, and steal a march on competitors still coming to terms with the nuances of GST and other import tax laws.
As recent online sales figures prove, shipping to Australia from the UK presents significant rewards when you work with the right partner. Get in touch with our team today to open your company to a world of opportunity.
Gary Tervit, International Director, P2P