This article provides a brief overview of the way customs, and GST work for businesses importing goods into Australia
Disclaimer: Due to the nature of our clients, Standard Ledger is by no means an expert on the treatment of imported goods. The information below is of a general nature only and is provided as a broad introductory guide only. If the importing of goods is your business, then you should contact the Australian Tax Office (ATO) and / or the Australian Border Force (ABF) to discuss your particular circumstances.
All goods imported to Australia are generally subject to duty, Goods & Services Tax (GST), plus other taxes that may be applicable according to the class of the goods. Customs is managed by the Australian Border Force (ABF) as part of the Department of Home Affairs
The ABF requires the owner of the goods (this can be the actual owner or someone that has control of the goods) to lodge an Import Declaration.
- If you are importing for business purposes typically this is managed via a freight forwarder or customs broker - they'll be using the customs Integrated Cargo Systems (ICS) to track imported goods and will inform you of the relevant duty and GST payable on the imported costs.
- If you're importing by post, the process is managed by Australia Post who will (generally) advise you if / when customs is payable.
How is customs calculated?
Customs duty is highly dependent on the type of goods, and other factors including exemptions, concessions & existence of Free Trade Agreements. Freight forwarders will use the ICS to determine the amount of customs (and other taxes) payable and issue a payment notice prior to the release of goods.
On most products imported into Australia, a 5% duty will be charged:
- Convert your purchase into Australian dollars (using an exchange rate based on the date of export);
- The import duty is based on 5% of the value of your goods converted to Australian dollars; and
- 10% GST is also generally applied (at the same time by the forwarders/brokers) to the value of the goods in Australian dollars, plus freight, insurances and the import duty.
GST on imports
GST is generally applicable on imports, unless the import falls into a narrow group of applicable exemption's - see the ABF website for GST on imported goods for (a lot) more information. If operating through a freight forwarder or customs broker this is normally determined, charged and is payable (through the forwarder / broker), prior to clearing customs.
Note that from 01 July 2018, in effort to "level the playing field", new legislation was introduced to also charge 10% GST on the price of products under a value of $1000 when sold to consumers, including books, jewellery, electronic devices, sports equipment, cosmetics or clothing imported into Australia (think Amazon). Before this change it was GST free - see the ABF website for more information on GST on low value imported goods
- Contact the Australian Border Force [ABF website]
- GST on imported goods [ABF website]
- GST on low value imported goods [ABF website]
- Importing by post or mail [ABF website]
- GST on low value imported goods [ATO website]