January 18, 2018 - Updated June 1, 2018

Alert! The Australian Tax Authorities are actively contacting North American companies!

New GST rules in Australia go in effect July 1, 2018. These new rules mean that any company from a country outside Australia (including North America) selling "low value goods" to private persons in Australia must register for, and pay Australian GST if the turnover is of AUD 75,000 or more in a 12-month period (low value goods are physical goods valued at AUS 1,000 or less). Once a North American company reaches that limit, it is required to also include any other applicable GST sales, such as services or digital products sold to Australian consumers. A North American company that is required to register for VAT is also required to ensure that certain information is provided to customers and included on customs documents.

Several U.S. companies have recently indicated that they have been contacted by the Australian tax authorities, attempting to alert any foreign company doing business within Australia that is not following these new rules. These companies are often unaware that they are required to register for VAT and charge VAT to the private customers. The call from the Australian tax authorities might come as an unpleasant surprise since they demand that the company declares and pays in the VAT due from sales to Australia. If this is not done the North American company can expect back taxes and penalties for any such sales after July 1, 2018.

There are a few exceptions to the new law, which include the North American company’s customer is a GST registered business within Australia, and are able to provide their Australian business number (ABN). It is also possible to apply for an exception if the multiple goods are sold and shipped together in one consignment to Australia (although the combined customs value of the goods is more than AUS 1,000). To find out if your company is required to register and charge VAT within the EU, please contact our VAT experts. For further information, please also visit: ato.gov.au/AusGST

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