Shoppers Look For Deals On Black Friday
Shoppers Look For Deals On Black Friday

GST loophole allows overseas rip-off

ONLINE shoppers could be lining the pockets of unscrupulous overseas sellers who charge GST but don't pass it on to the ATO because of a loop hole in the system.

Since the Morrison Government introduced a GST on 'low value goods' purchased overseas on July 1, 2018, just 1100 business worldwide have registered to collect the tax.

However, the Australian Taxation Office will not divulge which international businesses have registered to collect GST.

It means Australian shoppers have no idea if the GST they have paid on goods valued under $1000 was actually going to be remitted to the ATO or simply pocketed by the seller.

"The ATO does not publish a list of these registered businesses," an ATO spokesperson told The Sunday Mail.

"The ATO has observed high levels of compliance by foreign sellers and online trading platforms with this measure.

"Below those 1100 business, most of the small operators will supply less than the $75,000 threshold and therefore do not have to charge the GST."

Online platforms such as eBay and Amazon collect the GST on behalf of their vendors, meaning individual sellers do not need to register for GST, but also should not collect it separately either. Pic: Supplied
Online platforms such as eBay and Amazon collect the GST on behalf of their vendors, meaning individual sellers do not need to register for GST, but also should not collect it separately either. Pic: Supplied

Only businesses which sell goods to the value of $75,000 or more to Australia are required to register to collect GST.

Without knowing which businesses legitimately collect the tax, Bond University Business School senior teaching fellow Christine Newport said consumers should ask for an invoice before paying.

Ms Newport said if a business was registered with the ATO then they would have either an Australian Business Number or an ATO Reference Number.

"Ask them for an invoice before you send the money and the invoice should have an ARN or ABN because that is a requirement before the sell goods … which should have the GST payable," Ms Newport said.

"That would be the key to knowing whether they are registered or not," Ms Newport said.

Online platforms such as eBay and Amazon collect the GST on behalf of the vendor which means individual sellers do not need to register.

The GST should also be applied to freight, postage and insurance while international sellers are should include the tax in their pricing and not as additional charge.

"If GST is likely to apply to a good, the online store should display a GST-inclusive price," the ATO spokesperson said.

"The customs documents used for importations of low value goods have no requirement to show the amount of GST.

"The requirement is for the supplier or online marketplace operator to give the purchaser a document (invoice, receipt, etc.) showing the amount of GST paid by the purchaser or that the price paid included GST."

Bond University Business School senior teaching fellow Christine Newport said consumers should ask an online seller for an invoice with their ARN or ANB before paying for an item. Pic: Supplied
Bond University Business School senior teaching fellow Christine Newport said consumers should ask an online seller for an invoice with their ARN or ANB before paying for an item. Pic: Supplied

Ms Newport said "all tax systems" were flawed and that the number of international sellers exploiting the loophole would be in the minority.

She said there was always an inherent risk when ordering over the internet and being charged tax that is not forwarded to the ATO maybe the of a consumer's concerns.

"The risk of loss to Australian consumers from an overseas business that is not registered but charging GST on goods sold is probably not as great as the risk that such businesses will take money from Australian residents and never send the goods," Ms Newport said.