GST on the shipping/postage component is payable
Quite a few people post on these boards with confusion or indignation about being charged GST on the shipping component of their low-value imported goods purchase.
To clarify - yes, we as the buyers must pay GST on the postage from overseas to Australia for our purchases.
❝When you purchase goods sourced from overseas, shipping and/or insurance costs form part of the price of the delivered goods on which GST is calculated.❞
- Information for consumers
If the seller sells to you directly, AND is required to be registered for GST, the seller collects the GST on the goods plus the shipping/postage, etc.
❝If you sell the goods directly (for example, through your own website) and you are registered or required to be registered for GST, you should charge GST on these sales unless they are not subject to GST under Australian law (known as GST-free or input taxed sales).
The GST on your sale will be 1/11th of the price the consumer pays. If the amount paid includes fees for shipping or insurance, these amounts typically form part of the price of the goods when calculating the GST.❞
(Bolding mine.)
If the seller sends the goods to a re-deliverer (freight forwarding company), then the seller does NOT collect GST from the buyer. Instead, the re-deliverer collects the GST on the lot, including the cost of the goods, plus the cost of shipping, fuel surcharge, repackaging costs, insurance, etc.
❝Special rules for re-deliverers calculating GST
If you are a re-deliverer, the GST you charge will be:
- 10% of the amount paid by the customer for the goods, plus
- 1/11th of the amount the customer pays for your services to get the goods to Australia. As a re-deliverer, GST applies to all of your services, including international transport services and insurance for the transport of the goods.
Example
Jia wants to purchase a coat for the equivalent of A$200 from Clancy's, a store in the United States. Clancy's does not ship its products to Australia.
Jia contacts Take-it-Home Co to help her bring the coat to Australia. Take-it-Home Co provides her with an address in the United States. Jia buys the coat from Clancy's, which ships the coat to this United States address. Take-it-Home Co then arranges for the coat to be shipped to Australia.
Take-it-Home Co is registered for GST and charges Jia A$44, including A$4 GST, for the services it provided to bring the goods to Australia. It also charges Jia A$20 in GST on the coat, which is 10% of the amount Jia paid to Clancy's. Take-it-Home Co returns A$24 in GST to the ATO.❞
- Who charges GST
If you purchase on eBay from an overseas seller, then you WILL pay GST on the cost of the goods plus the cost of shipping. eBay in that case, as the EDP (Electronic digital platform), eBay is considered to be the supplier, and under the legislation is responsible for collecting the GST.
❝An EDP is a service (such as online marketplace) through which you can buy goods from various merchants.
GST on low value imported goods sold through an online marketplace is generally charged by the EDP operator, as they are deemed to be the supplier.❞
- Information for consumers
There's an exception, though - and this has caused a great deal of confusion. It's not really addressed on the ATO's pages, even though the ATO do mention the use of customs brokers and transporters.
The exception is that eBay has an agreement with Pitney Bowes, to provide the Global Shipping Program, whereby a buyer in Australia who wants to buy an item from a seller on eBay who doesn't ship to Australia for instance CAN DO SO. If the seller is opted in to the GSP, then the buyer can buy the item. The GSP has its problems and issues, but it does at least make available some items that buyers in Australia could otherwise not purchase (unless the buyers used a re-deliverer/freight forwarder, of course).
The buyer is going to have two or three separate charges for the one purchase:
- the cost of the item plus domestic shipping (this goes to the seller)
- the cost of the GST on that (this goes to eBay), and
- the cost of the ❝international postage cost, processing charges and any import charges (including any applicable GST)❞ according to eBay. (This goes to Pitney Bowes.)
It's the third of those charges which causes the biggest bewilderment. PB's charge doesn't boil down to a simple formula of international postage (A) + any insurance cost or fuel surcharge etc (B) + GST on (A+B). No; PB appear to charge an administrative fee for collecting the GST and then to charge GST on the administrative fee as well. I seem to remember that k1ooo broke this down in one particular post, but I don't think I tagged the post. If I ever find it again, I SHALL tag it.
eBay collects the GST for the item plus domestic shipping, and sends that GST to the ATO.
PB collects the GST for the international shipping and associated costs, plus GST on the administrative costs for collecting this GST, and sends that portion of the GST to the ATO. The rest of the amount collected by PB remains with them.
(This is to the best of my knowledge. Pitney Bowes have not explicitly stated that this is what's happening, as far as I am aware. They could not charge an administrative cost for collecting GST if they were an Australian business, as that's expressly forbidden under the legislation for Australian businesses... but they are not an Australian business and presumably the ATO cannot forbid them to charge this additional fee.)
