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.
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.