How import tax works in Australia: a guide to GST, customs duty and importing goods

Importing goods into Australia comes with costs, including import tax, GST and customs duty. Some imported goods qualify for duty concessions or GST exemptions. Understanding tax rules helps businesses and individuals budget, comply with laws and avoid unexpected charges.[ez-toc]

A quick guide to import tax

Import tax includes GST, customs duty and other charges on imported goods. The tax amount depends on the customs value, country of origin and product type. Duty concessions or GST exemptions may be available for some goods, and businesses may be able to claim a GST credit or defer the payment of GST where GST is payable. Understanding importation rules helps avoid delays and extra costs.

Who is responsible for import tax, and understanding when it applies

Understanding import tax is crucial for anyone bringing goods into Australia. The responsibility for paying these taxes depends on the type of importer and the purpose of the import.

Who must pay import tax?

The Australian government applies import tax to businesses and individuals who import goods. These include:

• Businesses – Companies importing goods for resale, manufacturing or commercial use.
• Consumers – Individuals purchasing products from international retailers for personal use.
• Online shoppers – People buying from overseas websites, including those using major platforms like Amazon and eBay.

Each group has different tax obligations, depending on the value of the goods and whether they are used for business or personal purposes.

Common import scenarios

Businesses

• Must pay GST and customs duty on imported goods.
• May be able to claim a GST credit if they are registered for GST.
• Must complete an import declaration if the goods are worth more than AUD $1,000.

Personal online shoppers

• Pay GST on purchases from international retailers.
• If goods are under AUD $1,000, taxes are generally included at checkout.
• Higher-value imports may require a customs declaration and additional charges. In this case, the freight company or postal service typically handles the import declaration on behalf of the importer, though the importer is responsible for any applicable duties and taxes.

Dropshipping and third-party fulfilment

• The seller may not handle taxes, but the consignee (buyer) is responsible for duties and GST.
• Some businesses defer tax payments using the deferred GST scheme.

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Tax obligations for business vs. personal importers

Importer typeGST payableCustoms dutyImport declaration required?BusinessYesNo, if under AUD $1,000Yes, if over AUD $1,000Personal buyerYesNo, if under AUD $1,000Yes, if over AUD $1,000DropshipperVariesDepends on the country of originMay be requiredBusinesses and individuals should check import rules before ordering from a foreign country. They must also ensure goods meet certain safety standards. Understanding these responsibilities helps avoid delays and unexpected charges.

Understanding key taxes and duties on imported goods

When businesses and individuals import goods into Australia, they must pay import tax and duties. These costs depend on the type of goods, their country of origin and their value. Importers should understand these charges to budget correctly and avoid unexpected costs.

Customs duty

Customs duty applies to many imported items. The duty rate depends on:

• The description of the goods and their classification under the tariff system.
• The country of origin and whether a Free Trade Agreement applies.
• The customs value of the goods, including the cost of the product but not GST or shipping.

Importers may be able to access duty concessions on some goods. These concessions reduce or remove customs duty if the goods meet certain criteria.

GST (Goods and Services Tax)

GST applies to most imported items at a rate of 10%. The tax is calculated on:

• The customs value of the goods.
• Any customs duty that applies.
• Freight and insurance costs.

Businesses that are registered for GST may be able to claim a GST credit. Some businesses defer the payment of GST using the deferred GST scheme.

Additional taxes on certain goods

Some goods are subject to extra taxes, including but not limited to:

• Luxury Car Tax (LCT) – Applies to imported vehicles over a set value.
• Wine Equalisation Tax (WET) – Affects certain wine products.

Tax rates on different product categories

Product categoryCustoms dutyGSTAdditional taxesGeneral goodsVaries10%NoneElectronicsVaries10%NoneClothing and footwear5%10%NoneCars over LCT limit5%10%LCT appliesWine5%10%WET appliesImporters should check tax rates, tariff classifications and duty concessions before finalising purchases as the percentages listed above can vary depending on multiple factors such as the country of origin. This helps them manage costs and comply with Australian import laws.

How GST is calculated and applied to imports

When businesses and individuals import goods into Australia, they must pay GST on most items. The Australian Taxation Office collects this tax before releasing the goods. Understanding how GST is calculated helps importers budget for total costs and avoid unexpected fees.

How GST is calculated

The GST amount is based on the customs value of the goods plus any additional costs. The formula for calculating GST is:GST = 10% of (Customs Value + Customs Duty + Shipping + Insurance)

• Customs value – The assessed value of the goods, usually based on the invoice price.
• Customs duty – A percentage applied to certain imported goods based on tariff classifications.
• Shipping and insurance – The cost of transporting and insuring the goods.

Example GST calculation

An importer brings in a shipment of electronics from a foreign country. The cost breakdown is:Cost componentAmount (AUD)Customs value$5,000Customs duty (5%)$250Shipping & insurance$500GST taxable amount$5,750GST (10%)$575The total payable amount for GST in this example is $575. If the importer is registered for GST, they may be able to claim a GST credit on this amount in their business activity statement. Some businesses defer the payment of GST using the deferred GST scheme, which includes details of deferred GST in their tax reporting.Understanding GST calculations helps importers plan costs and meet tax obligations when goods are sent to Australia.

Tax exemptions and concessions for importers

Not all imported goods are subject to full import tax and duties. Some goods qualify for GST exemptions or duty concessions, reducing costs for importers. Businesses can also claim a GST credit to offset tax payments on commercial imports.

GST-free imported goods

Certain goods are not subject to GST when imported, including:

• Medical devices – Equipment designed for medical use, such as wheelchairs and hearing aids.
• Health products – Some vitamins, supplements and therapeutic goods, though the majority of such products are subject to GST.
• Basic food items – Unprocessed food like fresh fruit, vegetables and some dairy products.

Importers must check if their imported goods meet Australian tax laws for GST exemptions. Goods must match specific design or nature criteria to qualify.

Duty-free allowances under Free Trade Agreements

Australia has Free Trade Agreements (FTAs) with several countries. These agreements allow certain imported goods to enter Australia with reduced or no customs duty. Duty-free status depends on:

• The country of origin of the goods.
• Whether the goods meet rules of origin under the agreement.
• If the importer holds importation evidence proving the goods qualify.

Importers may be able to access these duty concessions by providing the correct documentation during customs formalities.

Claiming GST credits on commercial imports

Businesses registered for GST can claim a GST credit for tax paid on imported goods. To do this, they must:

• Ensure the supply is connected with Australia and used for business.
• Keep records such as invoices and import declarations.
• Report the GST they pay in their business activity statements relevant to the import.

Some businesses also defer the payment of GST through the deferred GST scheme. This allows them to report and pay GST later instead of at the border.Importers should check tax laws carefully to ensure they claim exemptions and credits correctly. They must also hold relevant documentation to prove their eligibility for these benefits.Securely store important documentation in Business Kitz Document vault, and streamline your business process with over 100 document and agreement templates to help get you started. Sign up today!

Importation rules for low-value imported items (under $1,000)

Low-value imported goods (under AUD $1,000) follow different tax rules than higher-value shipments. The Australian Taxation Office applies GST to most of these goods, but customs duty does not apply. Importers should understand how GST is collected and how major online platforms handle tax at checkout.

Tax on low-value imported goods

For goods valued at less than AUD $1,000, the tax treatment includes:

• GST applies at a rate of 10%.
• No customs duty is charged.
• No need for an import declaration unless required for specific reasons (e.g. product restrictions).

The seller or marketplace usually collects GST at the time of purchase, reducing delays when goods are sent to Australia.

How online retailers collect GST

Overseas businesses must collect GST if they:

• Sell goods worth less than AUD $1,000 to Australian buyers.
• Have an annual turnover above AUD $75,000 from Australian sales.
• Are registered for GST with the Australian government.

These businesses must show GST and total payable amount on the receipt. If payment is required but not collected at checkout, buyers may have to pay GST before delivery.

How major platforms handle GST

Marketplaces like Amazon and eBay manage GST for sellers. When buying from these platforms:

• The receipt includes GST and total payable amount.
• Sellers do not need to charge GST separately.
• Buyers do not need to finalise tax payments with customs.

Buyers should check tax details before completing a purchase. Understanding importation rules helps avoid extra charges when goods have been imported.

Compliance requirements and avoiding penalties

Importers must follow strict rules when bringing goods into Australia. Mistakes in customs formalities can lead to delays, fines or extra taxes. Knowing the compliance rules helps importers avoid penalties and speed up clearance.

Customs declaration and goods classification

Importers must submit an import declaration for goods over AUD $1,000. This document provides details of values and other key information. It must include:

• The customs value of the goods.
• A clear description of the goods, including quantity and purpose.
• The country of origin and any duty concessions under a Free Trade Agreement.

Goods must be classified under the correct tariff codes. These codes determine customs duty rates and whether the goods are subject to extra taxes like excise tax or luxury car tax (LCT).

Penalties for incorrect declarations

Errors in importation paperwork can lead to:

• Fines for under-declaring the value of the goods.
• Extra customs duty and GST if authorities correct a misclassification.
• Seizure of goods that fail to meet certain regulations, such as product safety recall laws.

If goods arrive without the right permits, importers need a permit before they can clear customs.

How a licensed customs broker can help

A licensed customs broker can assist importers by:

• Ensuring customs formalities and would-be misclassifications do not delay shipments.
• Advising on duty concessions and tax benefits.
• Helping businesses hold relevant documentation for tax and compliance checks.

Working with a broker reduces errors and ensures imports meet certain criteria before arrival. Proper planning helps businesses avoid penalties and keep supply chains moving.

Strategies for reducing import tax costs

Importers can lower costs by using legal import tax reduction methods. These include Free Trade Agreements (FTAs), duty deferral programs and GST credit schemes. Bulk importers can also use special strategies to save on tax and logistics.

Using Free Trade Agreements to lower customs duty

Australia has Free Trade Agreements with many countries. These agreements reduce or remove customs duty on certain imported goods. To qualify, importers must:

• Confirm the country of origin is part of an FTA.
• Ensure goods meet FTA rules for duty-free entry.
• Provide importation evidence, such as a certificate of origin.

Importers may be able to benefit from these agreements by checking duty rates before purchasing.

Deferring duty and GST payments

Businesses can delay tax payments through special programs. These include:

• Deferred GST scheme – Businesses can defer the payment of GST until they submit their business activity statement relevant to the reporting period.
• Customs licensed warehouse – Importers can store goods in a warehouse without paying GST or customs duty until the goods leave storage.

Cost-saving tips for bulk importers

Businesses that import goods in large volumes can reduce costs by:

• Consolidating shipments – Combining orders to lower shipping and handling fees.
• Negotiating supplier terms – Reducing unit costs by buying in bulk.
• Checking duty concessions – Some goods imported for manufacturing or resale qualify for lower customs duty.

Planning shipments and using government of Australia programs can help businesses lower importation costs and improve cash flow.

Frequently asked questions about import tax and importation in Australia

Who pays import tax when importing goods into Australia?

Businesses, consumers and online shoppers must pay import tax when bringing goods into Australia. If goods are worth more than AUD $1,000, importers must submit an import declaration with details of values and charges. The assessment of GST, customs formalities or misclassifications can affect total costs.

How is GST calculated on imported items?

The GST you pay is 10% of the total taxable amount, which includes the customs value, charges for the imported goods, shipping and insurance. Some businesses use the deferred GST and total payable reporting option to delay tax payments.

Do I need to pay customs duty on all imported goods?

Would customs duty apply? It depends on the product type and country of origin. Some imported items qualify for reduced or zero customs duty under Free Trade Agreements. Businesses should check the details of values and charges before importing.

Can I defer GST payments on taxable importations made for business?

Yes, businesses eligible to participate in the deferred GST and total payable scheme can delay GST payments until they submit their tax statement. This payment deferral can improve cash flow for importers.

What happens if I do not complete customs formalities when goods are imported?

If goods have arrived in Australia without the correct paperwork, customs may hold or return them. Importers must ensure they have completed the customs formalities to avoid fines.

Does Australia have an indirect tax zone for imported goods?

Yes, Australia’s indirect tax zone affects certain imports. Depending on where the transaction occurs, some sales of goods may be exempt.

Final thoughts on import tax

Understanding import tax helps businesses and individuals plan costs and avoid delays. Importers must pay GST, customs duty and other taxes depending on the value of the goods and their country of origin. Some imported goods qualify for duty concessions or GST exemptions. Businesses may be able to claim a GST credit or defer the payment of GST to improve cash flow.Staying informed about importation rules improves compliance and helps prevent penalties. Importers should check tariff classifications, submit an accurate import declaration and follow customs formalities. Working with a licensed customs broker can help navigate tax laws and reduce errors.For reliable document management in international trade, use Business Kitz. Our platform simplifies document management so you can focus on growing your business, offering over 100 document and agreement templates, secure document storage, simplified document e-signing and many more features. Sign up for free today!Disclaimer: This content is intended to be used for educational and informational purposes only. Business Kitz does not offer legal advice and cannot guarantee the accuracy, reliability, or suitability of its website content for a particular purpose. We encourage you to seek professional advice from a licensed professional and verify statements before relying on them. We are not responsible for any legal actions or decisions made based on the information provided on our website.Unless expressly stated otherwise, all content, materials, text, images, videos and other media on this website and its contents are the property of their respective copyright owners.