September 17, 2018 | ATO
If you or your business imports or exports goods and services, then you will want to know the ins and outs of how Australian tax applies. Stay in the know with the answers to these common import and export tax questions
If you export goods or services and you’re an Australian resident entity, your export income is generally subject to income tax. This is because your assessable income includes your world-wide income.
However, if you derive income from another country and pay tax in that country, you may be entitled to a foreign income tax offset against your Australian income tax.
Foreign income your company earns may be exempt from Australian tax if it derives income by carrying on business at or through a permanent establishment in the other country. The source of income is generally the place where the:
If you’re exporting goods by selling them to a foreign resident entity on a free on board (FOB) basis in Australia, the place of contract is likely to be in Australia. If you export to a country that has a tax treaty with Australia, the treaty may have special rules to help you determine the source of the income. You can find more information and a list of Australia’s established tax treaties at What are tax treaties?
Some goods may have specific rules attached to them, such as excise or wine equalisation tax (WET). Excise is a commodity-based tax on alcohol, tobacco and fuel and petroleum products. If you import these goods you generally pay an equivalent customs duty to the Department of Home Affairs. Imports are called ‘excise equivalent goods’.
If you make wine, import wine into Australia or sell it by wholesale, you’ll generally have to account for wine equalisation tax (WET). WET is a once-off tax of 29% on the wholesale value of wine, and applies when you sell or deal with wine. It is only payable if you are registered or required to be registered for GST. Transactions may be exempt from WET when:
When importing or exporting goods and services you may be subject to GST. GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia and also on most imports of goods. Generally, once you are registered for GST you will include GST in the price of supplies to your customers and claim credits for the GST included in the price of your business purchases.
Imported goods worth over A$1,000 generally has GST collected by the Department of Home Affairs when you, as the importer, collect your goods at the border unless you are registered under the deferred GST scheme. When GST on a taxable importation is applied at the border it is payable by businesses, organisations and private individuals – whether they are registered for GST or not. However, a GST-registered business may be able to claim a GST-credit for any GST paid on imported goods.
The deferred GST scheme allows you to defer the payment of GST on taxable importations until the first activity statement you lodge after the goods are imported. To participate in the scheme you must:
You may not be eligible for the deferred GST scheme if:
For taxable imports, an assessment of GST, luxury car tax (LCT) or wine equalisation tax (WET) payable is made when a declaration has been received by the Department of Home Affairs and they have provided a declaration advice. Together these documents form the assessment notice.
As of 1 July 2018, GST generally applies to supplies of low value imported goods (worth less than A$1,000). This law is designed so that non-resident businesses:
GST also applies to sales of imported services and digital products made to Australian consumers when overseas businesses meet the A$75,000 registration threshold.
Exports of goods from Australia are generally GST-free if they are exported from Australia before or within 60 days of the first of the following two events:
In the case of exporting goods paid for in instalments, the payment referred to is the final instalment and the invoice referred to is the invoice for the final instalment. In some cases you can apply to the ATO to extend the 60-day period.
Other exports, such as services, various rights, financial supplies and other professional services can have specific rules to determine when they are GST-free or if they are excluded from being treated as GST-free. The ATO also recommends that you review the rules on importing and exporting from the Department of Home Affairs and the Department of Agriculture and Water Resources.
Make sure to stay aware of your status as an exporter. A change of international commercial (Inco) delivery terms could mean you’re no longer being considered as an exporter and GST may become payable on the supply.
After reviewing your international cross border transactions you may discover mistakes in your reported GST amounts. If this occurs, the ATO encourages you to make a voluntary disclosure. More information is available at Make a voluntary disclosure.
Duty-free shops are able to sell GST-free goods to travellers leaving Australia. Generally, GST-free goods sold to outbound travellers must be placed in a sealed bag. You can also use the sealed bag method to sell wine without wine equalisation tax (WET). GST-free goods sold or delivered to travellers after they have passed through the border clearance area don’t need to be placed in a sealed bag. You can find out more at GST-free sales to travellers departing Australia.
To find out more, visit the ATO website.