While preparing our article on affiliate advertising, we were disappointed to discover that the ATO hasn’t yet brought the giant Adorama online retailing business, based in New York, into its GST registration program. The law was changed in 2018. We sent off a few questions on how the ATO itself rates its performance in levelling the playing field for businesses both here (and overseas) which are collecting GST.
Inside Imaging:How does the ATO rate its effectiveness in enforcing the new regulations regarding low value purchases from international retailers?
Australian Tax Office: GST collections on low value imported goods have exceeded initial expectations.
Some key achievements include:
– The net GST revenue figure for low value imported goods in 2018-19 reaching $348 million;
– There are over 1000 entities which have registered for the low value imported goods measure;
– All major platforms [eg, Amazon, Ebay] are complying with the GST on low value imported goods;
– The ATO audit program can identify and address international retailers either through its own risk identification program or community referrals to enforce compliance with the measure.
II: Are there any plans to assist Australian retailers coming back from the Coronavirus lockdown with a renewed effort to bring large international competitors into the GST collection system?
ATO: The ATO recognises that there remain a small percentage of businesses who are not fulfilling their obligations and we continue to focus our efforts to ensure there is a level playing field between domestic and international sellers of goods to Australians. Our compliance program includes:
– Analysing third party data, including financial records and enhanced customs data to identify those who may not be complying;
– Investigating information submitted by the community for perceived non-compliance with the law;
– Using available tax treaties to request information about businesses with other countries, including the UK, USA and China;
– Undertaking compliance action including direct contact with those that are required to be registered.
II: What measures can the ATO enact to enforce compliance from recalcitrant international retailers selling low value goods into Australia?
ATO: The ATO prefers to work with businesses to obtain voluntary compliance. Where entities do not willingly comply we undertake a series of actions including:
Seeking assistance from their home jurisdictions.
Undertaking audits which may lead the ATO to compulsory register the non-compliant business.
Raising and issuing assessments.
Imposing penalties of up to 75% penalties.
In most cases, businesses comply prior to any such action taking place.
II: (Somewhat separate) What is the ATO doing in regards the scam whereby a (usually) HK-based retailer will:
– have a minimal real presence in Australia but present themselves on an electronic distribution platform as Australian with locally-based products;
– import products ordered by Australian consumers (‘when local stocks are low’ – ie, all the time), claim the price is GST inclusive, but not remit any GST to the ATO or provide a tax invoice?
ATO: It is only where the turnover of the entity is $75 000 or more that there is a requirement to register and collect GST. To ascertain whether this is the case, the ATO reviews financial information and may also undertake random purchases, to test whether the purchase price is inclusive of GST. Where there is a discrepancy the ATO may investigate further by using some or all of the compliance approaches listed above.
The ATO is confident that the system is working well which is evidenced in our response to question one.
Detailed information about our compliance approach is available on our website at https://www.ato.gov.au/Business/International-tax-for-business/GST-on-low-value-imported-goods/Making-compliance-happen/
If you are concerned that you or someone you know is doing the wrong thing, you can tell us about it by completing the tip-off form (the form is also available in the contact us section of the ATO app) or by phoning us on the ATO Tip-off hotline on 1800 060 062. More information is available at www.ato.gov.au/tipoff
– Australian Tax Office Media Unit
COMMENT: Without an active and engaged representative industry association, local distributors and retailers will need to go into bat for themselves. Careful observers of the various online offerings from overseas could do worse than taking up the ATO’s offer to provide information on the various Brothers Dodgy: ‘community referrals to enforce compliance with the measure.’ Likewise, the ACCC takes a dim view of false pricing in advertising. The $ sign only legally applies to Australian dollars in Australian advertising.