As of July 1st, 2018, Australia has introduced a Government sales tax on low value imports. This means that Australian shoppers are now expected to pay more for goods they buy overseas. The question is, how does this impact the regular savvy shopper that finds value in shopping overseas?
To answer this question and more, here are a few ways to help understand the new situation and tips to still shop smart for the future.
According to Satista, the eCommerce revenue in Australia in (USD) is expected to be $12 million, with its largest revenue coming from fashion.
Is this number high? If we look at Canada for comparison, it spends approximately $24 million on eCommerce in 2018. Australia’s spending habits are quite average, considering its population size.
The revenue is expected to rise in the new few years as more businesses emerge and offer shipping to distant locations and as the population rises.
The ratio of eCommerce revenue of each country could also be explain by the number of deterrents such as accessibility and shipping rates.
Places like Canada will have higher accessibility and cheaper shipping rates which could contribute to the amount of eCommerce revenue. It may not be worth it to ship to Australia for some businesses.
With the amount of international trade that ecommerce sites are offering, more goods are now available to distant locations like Australia and New Zealand. The problem is that these places traditionally have high shipping rates making it difficult to ship to.
Companies can utilize Amazon as its fulfillment which has a system in place for inventory to be stored at several localized warehouses which drastically reduces the cost of shipping for customers.
Not every business is set-up this way or designed to facilitate such a strategy which forces them to provide a direct-to-consumer option of shipping which is very costly.
The new Australian GST reforms are as follows:
– Any good valued at $1,000 or less are subjected to a GST tax
– Either the consumer or the vendor must pay for this tax
– Freight forwarding services are also subjected to this tax
– Prevents double taxation
Businesses located outside of Australia will need to register with the new streamlined approach to get a tax ID with the Australian government
Basically, what this means is that any time goods are valued $1,000 or less, it will be taxed, regardless of the method or purpose they were brought into the country.
This will initially impact businesses, especially small businesses.
Part of the problem is that this isn’t made very well known and it will come as a surprise for anyone who is starting to do business with Australian customers, especially if the business doesn’t do a lot of business with Australia.
On eCommerce sites, the new tax will show up at the checkout page of most sites (as seen below):
– Electronic marketplaces like Amazon or Ebay will also be subjected to this tax. This means that customers are expected to see the additional tax on anything they buy from these sites.
– Re-deliverers/ Package-forwarding companies:
– Companies that offer offshore mailboxes or assisted purchases will also be subjected to this tax.
Not only are they taxed upon the declared value of the good, but it is also applied on the service and insurance fee.
For more details on how re-shippers are charged see here.
The tax is set to 10% of the total value. This means that the maximum you will pay is $100 for a total declared value of $1,000.
Exemptions to this tax is if multiple items are consolidated into one order and has a declared value of over $1,000. Which means that consolidated items will be subjected to the border fee.
Import duty is 5% on goods valued at $1,000 which means you only pay $50 vs the $100 you would pay if the order is just shy of the cut off point.
If you are buying bulk regularly such as a business buying inventory, then the value adds up.
Even if you are not buying for a business, purchasing electronics, furniture, fashion and other goods as a bundled purchase can easily drive the declared value over $1,000 which enables you to save from the tax you would have had to pay per item.
This is where the value of package forwarding services like Reship can shine. With the help of assisted purchases, mail box storing and package forwarding, you can purchase online store goods on sale and get it shipped for less.
Reship can unique position customers to ship to Australia for less, save on the tax, and make it easy to shop online.
For example, you take advantage of a summer sale and consolidate several of your packages. Getting that shipped to you will provide a reduced shipping rate and you will save on the 10% GST that you would have otherwise had to pay.
Or, if you purchase a few items every month and store them at Reship. Once the declared value reaches over $1,000 you can have it shipped to you and just pay the duty fee. This could save you hundreds in shipping and tax fees that you have otherwise had to have paid.
Utilizing tricks like these can benefit you in the long-run so you can ship to Australia with ease for businesses and customers a-like.