GST on Imports in Australia

Understand how GST applies to imports in Australia, including who pays, how to calculate it, and options for deferring or claiming GST credits.

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How GST Applies to Imported Goods in Australia

The Goods and Services Tax (GST) is a broad-based consumption tax that applies to most goods and services sold in Australia. Introduced on 1 July 2000, GST replaced the Wholesale Sales Tax (WST) as part of a major tax reform. The GST rate is currently set at 10%, and it applies at various points in the supply chain, not just to the final consumer price.

However, for businesses importing goods into Australia, GST is handled differently. Importers must pay GST at the border based on the value of the taxable importation, unless they qualify for deferral or exemptions. This guide provides a comprehensive overview of how GST applies to imports, helping businesses understand their obligations and potential cost-saving strategies.

How GST Is Calculated on Imported Goods

If you’re importing goods into Australia, you must factor in Goods and Services Tax (GST), which is 10% of the taxable importation value. But how is this value calculated?

Here’s how it works:

  • Customs Value (CV): The price paid for the goods, excluding international shipping and insurance costs.
  • Customs Duty (if applicable): Some goods attract customs duty, which depends on their classification and country of origin.
  • Transport and Insurance Costs (T&I): Freight and insurance charges to bring the goods to Australia.
  • Wine Equalisation Tax (WET) (if applicable): If you’re importing wine or certain alcoholic drinks, this tax is included in the GST calculation.
Want to simplify the process? Use our GST calculator to quickly estimate the GST payable on your imported goods and ensure you’re prepared for the costs involved.

Example Calculation: What You’ll Pay

Let’s say you’re importing goods with a customs value of $10,000, a customs duty rate of 5%, and shipping and insurance costs of $2,000.

Here’s how it breaks down:

  • Customs Value (CV) = $10,000
  • Customs Duty (5%) = $500 → (5% of $10,000 = $500)
  • Transport & Insurance Costs (T&I) = $2,000

So, the Value of Taxable Importation =

$10,000 (CV) + $500 (Customs Duty) + $2,000 (T&I) = $12,500

Now, let’s calculate GST:

GST (10% of Taxable Importation Value) = $1,250
(10% of $12,500 = $1,250)

Total Cost of Importing the Goods

The total amount payable to the Australian Border Force (ABF) upon import is $1,750, which includes both customs duty and GST. This brings the final landed cost of the goods, including shipping and taxes, to $13,750.

Who Pays GST on Imported Goods?

Thinking of ordering goods from overseas? Chances are, you’ll be paying GST. Here’s who’s responsible:

  • Individuals buying personal items – If your purchase is under $1,000, the overseas retailer may charge GST at checkout.
  • Businesses importing for commercial use – GST applies to imports over $1,000 and must be declared on the BAS.
  • Redeliverers handling low-value goods – If using a redelivery service, they may collect and remit GST.
  • Customs agents or brokers – They can pay GST to ABF on behalf of importers, who must reimburse them.
  • Government agencies – Some are exempt from GST on imports used for official purposes.

The information above essentially ensures you stay compliant with tax laws. The result? No unwanted surprises at the border, and a smooth import process.

When Should You Pay GST?

GST is collected by the Department of Home Affairs (Customs) on behalf of the Australian Taxation Office (ATO). It must be paid:

  • At the same time as customs duty (if applicable).
  • Before goods are cleared for home consumption.
  • If goods are warehoused, GST is deferred until they are removed.

If you’re regularly importing goods, staying informed about GST obligations can prevent unexpected costs and streamline your supply chain.

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Which Imports Aren’t Eligible for GST?

Not all imports attract GST. Some goods are GST-free, input-taxed, or exempt under customs duty concessions.

1. GST-Free and Input-Taxed Imports

These goods would not attract GST even if sold within Australia:

  • Basic food
  • Medical aids and appliances
  • Cars for people with disabilities
  • Precious metals (gold, silver, platinum in investment form)

 

2. Duty-Free and Concession Imports

Certain goods qualify for GST exemptions under customs laws, including:

  • Government & diplomatic imports – Official goods for foreign governments or under Status of Forces Agreements.
  • Passenger & personal exemptions – Duty-free purchases, personal effects, and household goods brought in by travellers or defence personnel.
  • Returned & temporary imports – Goods re-imported after warranty repairs or imported temporarily for repair and re-export.
  • TRADEX Scheme goods – Items imported for processing and later exported.
  • Donations & special imports – Charitable donations, inherited goods, and trophies from international competitions.
  • Low-value & sample goods – Items under $1,000 (excluding alcohol, tobacco, and bulk orders) and product samples of negligible value.

These exemptions can be subject to conditions, so importers should check with Australian Border Force (ABF) or the Australian Taxation Office (ATO) if unsure.

Deferring GST Payments (Deferred GST Scheme)

The Deferred GST Scheme enables GST-registered businesses to defer payment of GST on taxable importations until the next BAS lodgment. This means that if you’re registered for GST and import goods for business use, you can report the GST on your BAS rather than paying it upfront at the border.

There are certain eligibility criteria to be met in order to participate in the Deferred GST Scheme, such as:

  • You must be registered for GST.
  • You must lodge your BAS monthly.
  • You must have a good compliance history with the ATO.

Participating in this scheme can help improve cash flow for businesses that regularly import goods, but it’s important to keep accurate records and ensure timely BAS lodgment in order to avoid penalties.

If the business is eligible for GST credits, it can offset the deferred GST amount, potentially reducing or eliminating the amount payable.

Example of GST Deferral in Action

Let’s say your business imports goods with a taxable importation value of $12,500.

Under the normal system, you would pay $1,250 GST at the border before customs releases the goods. With the Deferred GST Scheme, no GST is paid upfront—instead, you report the $1,250 GST on your next BAS.

If your business has $1,250 in GST credits, this offsets the deferred GST, meaning no out-of-pocket GST payment is required. However, if your business has less than $1,250 in GST credits, you will need to pay the remaining amount when lodging your BAS.

This scheme can provide significant benefits for businesses with regular imports, allowing them to free up cash flow and better manage tax obligations. It’s important to consult with a tax professional or the ATO to determine eligibility and ensure compliance with all applicable requirements.

Claiming GST Credits on Imported Goods

If you’re a GST-registered business importing goods for business use, you can claim a credit for the GST paid on imports. This helps offset the GST you owe on local sales, effectively reducing your overall tax liability.

To claim GST credits, you must:

  • Be registered for GST.
  • Have a valid customs import declaration (a tax invoice alone isn’t enough).
  • Ensure the goods are used for business purposes (not personal use).

GST credits must be claimed through your BAS, not through the Integrated Cargo System (ICS).

Once eligible, you can report the GST paid in your next BAS. The credit should be claimed in the same reporting period where the GST was paid or deferred. Keeping accurate records is essential to ensure compliance and avoid issues with the ATO.

Seamless Import Solutions with MCC World International

Navigating GST, customs clearance, and compliance can be overwhelming, but MCC World International makes it easy. Our licensed customs brokers handle everything—from calculating GST and filing import declarations to ensuring you qualify for GST deferral and credits.

Contact us today to streamline your import process and maximise the benefits of claiming GST credits.

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