If you sell online to Australian customers then, from 1 July 2018, you may need to be registered for Australian GST and start paying GST to the Australian Government. This applies to all businesses operating out of New Zealand who have more than A$75,000 worth of total sales to Australian customers.
The system is fairly straightforward, but there are some important things you need to know.
Is it you or your online marketplace that needs to pay?
First, you need to work out who is responsible for paying GST. If you use a marketplace platform like Ebay or Amazon, then chances are the website will be responsible for GST. However, if you sell more than A$75,000 worth of product direct from your own website, or over the phone to Australians, you will need to register for GST with the Australian Tax Office. Most New Zealand retailers are likely to be eligible for the ATO’s “simplified registration process” that will mean you are assigned an “ATO Reference Number”, which is like a GST number here.
Even if you use an online marketplace to access the Australian market – you do need to talk to your online platform about how it will handle the GST requirement. You need to know whether you need to increase your prices to take account of the additional GST, or whether the website will calculate that for you.
Prices need to be in Australian dollars and include Australian GST
You also need to know that, under Australian law, the price displayed to Australian customers must include GST and be in Australian dollars. If you are unsure whether GST needs to be paid, it is acceptable to display a GST exclusive price, so long as you display an inclusive price as soon as you know you are shipping to Australia.
Some products are exempt
GST in Australia is a bit more complicated than our simple system in New Zealand. It is set at 10 per cent (so 1/11th of the price charged to the customer, inclusive of freight and insurance, needs to be paid to the Australian Government. There are exemptions covering most basic food, some medicines and some medical aids and appliances but most physical goods being shipped by New Zealand retailers to Australian customers are likely to be subject to GST.
You don’t charge on sales to GST-registered businesses
Unlike New Zealand, it’s good to know that if you are selling to a business that is registered for Australian GST, you don’t need to charge GST on the transaction. However, you do need to have received a statement from the purchaser that they are registered for GST; and to have captured the Australian Business Number (ABN) of the entity concerned. If you sell direct to Aussie business customers, you might need to tweak your website to take account of this.
GST on high-value goods, alcohol and tobacco will still be collected at the border
The new rules apply only to sales of low value goods under A$1,000. If you are selling items worth more than A$1,000 (or shipping items valued at more than $1,000 together), or if you are selling alcohol or tobacco, you should not charge GST on these items. Instead, GST and other taxes will be collected at the border, as is currently the case.
You need to provide tax and Customs documentation
When you are selling goods you need to provide a receipt or other document that shows:
- your GST registered name;
- your ARN or ABN number;
- the date, details of the goods;
- the sale price and the amount of GST charged; and
- (if applicable) the recipient’s ABN and whether or not GST was charged.
A copy of this documentation needs to accompany the goods.
You need to file returns and pay GST quarterly
Once you are registered, you will need to make quarterly GST returns to the ATO. The deadline for returns is the 28th of January, April, July and October, covering the three previous months.
If you want more information, please visit www.ato.gov.au/ausgst, or consult your tax adviser.
What about foreign firms selling into New Zealand?
The New Zealand Government is not yet following Australia’s lead on this issue, and Australian (and other) companies selling online to Kiwi customers can continue to sell low-value goods to New Zealand without paying their share of GST.
Retail NZ is continuing to lobby for New Zealand Government action to level the playing field. For more information, please see www.retail.kiwi/efairnessNZ.