As Freight & Trade Alliance (FTA) members would be aware, the federal Parliament last week passed the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 with amendments. Based on this outcome we anticipate that Bill will Royal Assent in coming days.
Productivity Commission
Under this legislation, effective from 1 July 2018, suppliers, online marketplaces and redeliverers with an Australian GST turnover of $75,000 or more are required to register, charge, report and remit GST on sales of low value goods to consumers in Australia (vendor collection model). High value goods (with customs value greater than $1,000) will continue to be taxed at the border. Indications are that this outcome is not conditional on the outcome of a Productivity Commission Inquiry that is required to report on 31 October 2017.
The Treasurer, the Hon. Scott Morrison, clarified in his speech to Parliament on Wednesday 26 June 2017 that the Government's policy is to implement the vendor collection model as legislated and that businesses should take the actions needed to implement it on the basis of the vendor model. The Treasurer went on to say the Government will not look kindly on businesses that in 6 months time say it is too difficult to implement because they have not prepared for compliance by 1 July 2018. See the Treasurer's Media release.
Furthermore, FTA also received a commentary from the Australian Taxation Office (ATO) stating "the vendor collection model will commence on 1 July 2018 and is not conditional on the outcome of a Productivity Commission Inquiry." In response, FTA questioned what the actual purpose is of the Bill amendment 177-20 (1) (b) that states that the Productivity Commission must include in its inquiry "whether models for collecting goods and services tax in relation to offshore supplies of low value goods other than the amendments might be suitable (including evaluation of the effects of the models on Australian small businesses and consumers)"
177-20 (1) (b) seems to indicate that the Bill and the effects of models are being considered with the potential for changes to meet the intent of the legislation. Based on this interpretation, FTA suggested that it may be premature for industry to invest in changes until they know the final outcome of the inquiry and the legislative process. We also note that the ARA ,who have been strong advocates for the vendor collection model, are taking a pragmatic approach to support the Productivity Commission to examine alternate models https://www.insideretail.com.au/blog/2017/06/20/review-on-low-value-gst-looms/
FTA has highlighted to the ATO that we are not trying to steer this one way or another. We are simply looking to give our membership the best possible advice to prepare for reforms and to that end we are seeking clarity as to what the purpose is of the Productivity Commission inquiry if no matter what, we are forging ahead with the vendor collection model.
FTA again spoke with ATO representative this morning, 26 June 2017 and have received a commitment for a more detailed response in coming days which we will share with FTA / APSA members.
Integrated Cargo System (ICS) Testing
In the interim, the Australian Border Force (ABF) have this morning also sent the following commentary representatives of the Compliance Advisory Group (CAG) :
"With regard to the ICS changes, the additional fields and GST exemption code are available in the test environment and have been for some weeks. While the additional fields are also visible in the production environment, the GST exemption code of "already paid" will not be available in the production environment until the commencement of the legislation in 2018.
Given the availability of the fields in the test environment, and the advice from Treasury above that businesses should start preparing for the vendor collection model now, the Department encourages you to commence work on your required preparations for these changes and advise your members, where applicable, of this advice.
If you have any questions about scenarios where GST may or may not be payable on low value goods, you can contact AustraliaGST@ato.gov.au."
Implementation Guides
The ATO has also published two new draft Law Companion Guidelines about GST on cross-border supplies, and invite comments by 10 July 2017.
Draft Law Companion Guideline LCG 2017/D4: GST on supplies made through electronic distribution platforms is about when an EDP operator (such as the operator of an online marketplace) is responsible for GST on supplies of:
digital services and digital products under enacted law which applies from 1 July 2017, and
low value imported goods, under the Bill currently before Parliament.
Draft Law Companion Guideline LCG 2017/D5: When is a re-deliverer responsible for GST on a supply of low value imported goods? explains how the proposed amendments for GST on low value imported goods will apply to re-deliverers.
These draft guidance products complement the draft Law Companion Guideline that the ATO published earlier this year, Draft Law Companion Guideline LCG 2017/D2: GST on low value imported goods.
You can submit your feedback to us on our Let's Talk page, or by emailing us at AustraliaGST@ato.gov.au or via FTA at pzalai@FTAlliance.com.au
Paul Zalai – FTA / APSA