If you’re running a foreign business that supplies low-value goods to Australia, you may be caught in the GST net from 1 July 2018. The previous $1,000 low-value threshold will no longer apply and those businesses that meet the $75,000 registration threshold will need to register, charge and remit GST to the ATO. This applies regardless of where the business is based.
The ATO will be using a number of information resources to find non-compliant businesses including:
- financial data tracking that follows the flow of funds from purchasers to suppliers overseas;
- customs data on details of imports into Australia;
- information from other countries obtained through information sharing arrangements;
- online investigations to identify websites and businesses involved in supplying goods to consumers in Australia; and
- reports of non-compliance from individuals or businesses.
Those businesses that are “willing to do the right thing” (i.e. register for GST as required, make necessary changes to their business systems, collect GST as required, report and pay GST collected by the due date) or are “mostly compliant” will not be contacted unless there is a mistake made, and no penalties will be imposed from 1 July 2018 to 30 June 2019.
However, those businesses that are partly compliant (i.e. registered for GST but have not collected, reported or paid the GST collected) or are completely non-compliant can expect the ATO to register the business for GST, calculate their liability and issue an assessment. An additional 75% administrative penalty will also be imposed (higher penalties can apply if the business is a significant global entity) and debt recovery action will be initiated.
The ATO can also request the taxation authority in the foreign jurisdiction to recover the debt on their behalf, and may intercept funds from Australia that are destined for the business.
What are my GST obligations?
If you are running a foreign business, we can provide you with more details of the changes coming in, the compliance involved and what you need to do. These new laws are largely untested, so you want to make sure you get it right.