Australia’s Goods & Services Tax (GST) for Amazon Sellers

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Australia’s Goods & Services Tax (GST) is a heavy tax for many small businesses, but those Amazon sellers with an Australian address can get a 10% tax waiver.

In December 2017, Amazon launched its online presence in “The Land Down Under.” Although the kick-off was slow, in the last couple of months, Australia’s e-commerce has gained momentum.

Online shopping is becoming a default option of modern-day consumers, especially now that the latest global events are pushing people towards e-shopping.

As the number of sellers on Amazon increases, tracking each item that enters the country becomes increasingly difficult for the Australian government. Intervention only comes during a manual inspection of every item at the border, which is not an entirely sustainable option.

Which makes it easy for restricted products to slip under the radar.

The government is addressing this concern by applying a “Goods and Services Tax (GST)” on all products coming into the country, as part of their tax reform.

Australia’s GST: A Closer Look

Most items and services sold in Australia have an additional 10% Goods and Services Tax, with an exemption for specific types of healthcare, housing, and food items.

Originally, imports with a value of AU$1000 or less were allowed to be shipped into the country without incurring any duties or taxes. 

Now, the 10% GST applies to imported goods that have a customs value of AU$1000 or less, known as Low Value Imported Goods (LVIG). However, if an item has a customs value over AU$1000, the charges need to be processed at the border.

Businesses gather GST for the government. Then, it is turned over to the Australian Taxation Office (ATO).

The funds are allocated to different states for public services and infrastructure.

Australia’s GST on Items Sold on Amazon

Based on this legislation, Amazon needs to calculate, collect, and remit a GST of 10% on any LVIG sold by merchants on Amazon, including items that are shipped from outside the country to an address within Australia.

When a customer proceeds to checkout and indicates an Australian delivery address, the 10% GST will be applied to each taxable item on top of shipping, and the calculated tax will appear on the total amount of items for purchase.

This also applies to charges such as delivery and gift-wrapping as long as LVIG items are included in the order. 

In the case of an imported item with a customs value higher than AU$1000, Amazon will not include the 10% GST anymore.

Still, other charges required by the carrier will go under inspection for customs to clear the item. 

Effect of Australian GST on a Seller’s Account

If you are currently an Amazon seller or are planning to create a seller account, it’s important to acquaint yourself with the specifications of GST. Some terms apply to both Fulfilled by Amazon and Merchant Fulfilled Network sellers, while others only affect either one or the other. 

Being familiar with the system makes it easier for you to have an idea of what the computation of GST on an LVIG item will be.

One factor to determine how a seller will fare on the market is the knowledge of preexisting taxes set by the government, especially any particular tax prerequisites like the GST required by Amazon Australia. 

Some Things to Keep in Mind

  • If you have an item in your inventory that is considered LVIG, the 10% GST will be calculated, collected, and remitted by Amazon.

This tax will be included in the total price and delivery charges that you have specified in Seller Central for each LVIG item, regardless of the total amount for all the items in an order.

  • Amazon will also be responsible for remitting the collected tax to ATO, not sellers. 

Amazon uses the “Ship From” location specified on your Seller Account as a basis for calculating GST.

  • Every seller is required to provide an accurate location and avoid entering false information regarding their Ship-From location. Otherwise, Amazon may terminate the Seller Account.

Additionally, products from outside Australia that not abide by GST requirements, may be delayed or fined at customs.

In these cases, the seller will not receive any payment from the sale if the order fails to arrive at the customer’s address.

  • FBA sellers do not need to provide any additional information to Australian customs since the packages will be processed by Amazon.

This is different for seller-fulfilled packages.

MFN sellers will have to do the work to comply with the requirements for clearing the package through Australian customs. 

Sellers with ABN

It is not a requirement to obtain an Australian business number (ABN) to sell on Amazon Australia, but having one does come with some benefits.

If you are a seller with an ABN and are registered for GST, you will not get a 10% GST charge on your Amazon Seller Fees.

You just have to provide your ABN to Amazon on your Seller account as confirmation that you have registered for GST in Australia. Resident Australian sellers who haven’t registered yet for GST will still have to pay the 10% rate in addition to their Seller Fees. 

Application for an ABN can be processed online. Once you have specified a valid ABN, you can also ask for a refund for GST that has been charged to your Seller account prior to the ABN application. All you need to do is send a request to Amazon Seller Support. Refund requests may take up to 90 days, but you will get notified once your request is processed.

Once they approve your request, they will inform you when your refund will reflect on your Seller Account.

Final Thoughts

Familiarizing yourself with guidelines on GST is a necessary step for entering the market as an Amazon seller.

Amazon is considered new compared to the roster of established local competitors, and the company is going slowly but surely.

The number of sellers on the Australian site is still relatively low compared to, so Australian sellers can enjoy a big share of patrons without the harsh competition.

Additionally, the launch of Amazon Prime in Australia will drive more shoppers to the site, and sellers can look forward to an increase in potential customers. 

Recommended: The Rapid Growth of Amazon Australia

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