Australian Low-Value Tax Law
Learn how Zonos helps manage the Australian Low-Value Tax law.
The Australian low-value tax scheme, also known as the Simplified GST law, has been in effect since July 1st, 2018. Let’s decode this law and what it means for businesses selling goods to Australia.
For online retailers, if you sell, or expect to sell, over 75,000 AUD to Australian customers within a 12-month period, you are required to remit GST directly to the Australian Taxation Office (ATO) via a Simplified GST for Importers process.
- Wholesale and B2B transactions are exempt from the threshold calculation and do not need to be remitted.
- Note that the 75,000 AUD threshold is inclusive of product sales, not including the GST.
- If you are a U.S. retailer, keep the currency exchange rate in mind.
- We recommend registering for GST if your current month and trailing 11 months of sales were equivalent to or greater than 65,000 AUD.
If you do not reach the 75,000 AUD threshold, you will not need to register for GST.
- If you are not registered, Zonos Hello or Zonos Checkout will inform Australian shoppers that they will not have to pay GST at the time of order or at the time of delivery if their cart total is under 1,000 AUD.
- Get an AUSid - To access the simplified GST registration form (discussed in step two), you will need a secure credential called an AUSid. Simply download the AUSid application and set up your account to securely access the online platform for simplified GST whenever you need to. If you need an AUSid, go to AUSid online services
- Register for simplified GST - After you obtain your AUSid, select Register now to access the online services for non-residents with your AUSid and register for simplified GST, or visit the Simplified GST Instructions.
The session can expire quickly so be sure to already have your AUSid application open before entering your username.
- Go to the AUSid login page and copy the reference number.
- Enter your username and copy the reference number.
- Open the downloaded AUSid application on your computer and paste in the reference number.
- Enter your password into the AUSid application.
Things to note about Simplified GST registration:
- You do not have to prove your identity.
- You use an ATO reference number (ARN) instead of an Australian business number (ABN).
- You must lodge your GST returns and pay GST quarterly through the ATO website.
- You can pay electronically via SWIFT bank transfer or credit card.
- If you are required to collect GST on low-value orders and have a registered AUSid, adding your tax ID inside of your Dashboard will turn on GST calculation and collection for your Australian shoppers. Zonos Checkout or API will automatically start calculating 10% GST on all orders to Australia, even those under the de minimis of 1,000 AUD.
- Once enabled, international low-value taxes (ILVT) will always be collected at the time of checkout. There will not be an option to pay later or at the time of customs clearance.
Avoid double taxation
If you are currently collecting GST from your customers at the time of checkout on orders under 1,000 AUD, we do not recommend managing a two-tiered system where you collect on orders under 1,000 AUD and then let your customer pay upon delivery when the order is over 1,000 AUD. The issue with this and the recommended course of action are explained below.
The product value on an order was 740 USD, just below 1,000 AUD. If the commercial invoice is listed at 740 USD (and the currency rates change from the time you took the order to the time the shipment cleared customs), it may now be valued above 1,000 AUD. In this scenario, if you collected 10% GST at time of checkout the customer would have to pay 10% GST again when the shipment clears customs, which is double taxation. If you are double taxed, you will need to refund your shopper and then reduce your next tax reporting by the appropriate tax amount in the next reporting period. Do not attempt to amend a prior report.
Note that when an order exceeds 1,000 AUD, Australia will collect GST at the time of customs clearance. If you collect GST at the time of checkout and the conversion rate changes before it is delivered, the customer could be double taxed - by you and by customs. This negative shopper experience can be avoided by doing the following:
Send all orders over 1,000 AUD DDP (Delivery Duty Paid). DDP, also known as billing the duties, taxes, and fees to the shipper, will ensure GST, duty, and other cross-border fees are billed back to you by the carrier. You must be sure to send the shipment via a carrier and service level that supports DDP. If the order is sent DDP (and the customs documentation does not reflect your collected GST at the time of the order), you will be billed by the carrier for GST and duty. This means you would not remit GST back to the ATO on orders over 1,000 AUD, because you paid it through the carrier.
If a shipment is sent with USPS, do I still need to collect Australian GST?
Yes - once you have your AUSid, you need to collect GST on all orders, including those shipped with the USPS. However, the USPS does not have a DDP service - so if the orders exceed 1,000 AUD, Zonos recommends using an express carrier like UPS, DHL, or FedEx and sending the shipment DDP to avoid running into the double taxation issue discussed above.
Will Zonos inform me if I need to register for Australian GST?
We will periodically send notices to retailers who have reached the threshold, but the responsibility to monitor your Australian imports and register when needed lies with you.