Online shopping can make it difficult to tell whether GST has been included in the price, added at checkout or will be collected when goods arrive in Australia. The answer depends on what you are buying, where the seller is located, the value of imported goods and whether you are buying personally or through a GST-registered business.
For most everyday online purchases from Australian retailers, GST is already built into the advertised price. Imported purchases can be less straightforward, particularly where goods are shipped from overseas or bought through an online marketplace.
The short answer: GST often applies to online purchases
GST is generally charged at 10% on taxable sales in Australia. A business makes a taxable sale where it sells something for payment in the course of its enterprise, the sale is connected with Australia, and the business is registered or required to register for GST. GST does not apply to sales that are GST-free or input taxed.
For online shopping, this means GST may apply to:
– goods bought from Australian online retailers;
– low-value physical goods shipped to Australia from overseas;
– digital products, such as apps, e-books, games and streaming services;
– online subscriptions and memberships;
– some professional, education and consulting services purchased from overseas; and
– goods purchased through online marketplaces.
You may see GST handled in different ways. It can be included in the displayed price, added at the final checkout stage, or shown separately on your order confirmation.
A receipt saying “GST included” does not necessarily mean you can claim a GST credit. That depends on whether you are registered for GST, whether the purchase relates to your business, and the records you hold.
Buying from an Australian online retailer
If you buy from an Australian retailer that is registered for GST, the usual GST rules apply. The retailer will generally include GST in the price of taxable products, whether you buy in a physical store, through its own website or via an online marketplace.
For individuals buying for private use, GST is simply part of the cost. There is usually nothing further you need to do.
For a sole trader, company or trust registered for GST, the purchase may give rise to a GST credit if it is acquired for a business purpose. The claim is made through the business activity statement, commonly called the BAS.
However, not every online purchase includes GST. Common reasons include:
– the seller is not registered for GST;
– the seller is not required to be registered because its GST turnover is below the registration threshold;
– the item is GST-free; or
– the item is being sold privately rather than through a business.
The current GST registration threshold for most businesses is $75,000 of GST turnover. A business below that level may choose to register voluntarily, but it is not always required to do so.
It is also important not to assume that every food purchase is GST-free. Some food is GST-free, while other products are taxable. The GST outcome depends on the particular item, not simply the fact that it is sold as food.
GST on low-value goods sent from overseas
GST can apply to low-value goods bought from overseas and shipped to Australia. Low-value goods are generally goods with a customs value of $1,000 or less, excluding tobacco, tobacco products and alcoholic beverages.
In many cases, GST on these purchases is collected at the point of sale by:
– the overseas merchant;
– the operator of an online marketplace or electronic distribution platform; or
– a re-delivery service that helps arrange delivery to Australia.
This is why an Australian shopper may see GST added when buying from an overseas website, even though the retailer is not based in Australia.
For low-value imported goods, GST is generally calculated on the price of the delivered goods. This can include shipping and insurance charges, not just the price of the item itself.
For example, a person may buy clothing from an overseas retailer for private use. The items themselves are below the low-value import limit, but the retailer adds GST at checkout based on the goods, delivery and insurance components of the order. The GST is collected by the retailer or marketplace rather than at the Australian border.
Where GST has been correctly collected at checkout, the goods should generally not have GST collected again at the border. The information provided with the import documentation helps prevent double taxation.
Not every overseas seller will charge GST. An overseas supplier or marketplace may not need to register for Australian GST if it does not meet the applicable GST registration requirements. That does not automatically mean the purchase is cheaper overall, particularly if other border charges may apply.
What changes when imported goods are worth more than $1,000?
Imported goods with a customs value above $1,000 are generally dealt with at the border rather than under the low-value point-of-sale collection rules.
The importer may need to make an import declaration and pay relevant amounts before the goods are released. Depending on the goods, these amounts can include:
– GST;
– customs duty;
– an import processing charge; and
– other taxes or charges that may apply to particular products.
GST on a taxable importation is 10% of the value of the taxable importation. That value can include the customs value of the goods, international transport and insurance costs, customs duty and any wine tax that applies.
Customs duty is separate from GST. Whether duty is payable, and how much, can depend on the type of goods, their tariff classification and their country of origin. A low advertised price does not necessarily reflect the full landed cost once shipping, GST, duty and processing charges are taken into account.
Alcohol and tobacco are particularly important exceptions. They can attract duty, GST and other charges regardless of their value. If you are buying these items online from overseas, do not assume the low-value goods rules will protect the purchase from border charges.
For higher-value purchases, it is sensible to check the likely total cost before placing the order, especially for products such as electronics, machinery, luxury goods, commercial equipment or large quantities of stock.
GST on digital products, subscriptions and overseas services
Online shopping is not limited to physical products. GST can also apply to imported digital products and services supplied to Australian consumers.
Examples can include:
– streaming subscriptions;
– e-books, digital newspapers and online magazines;
– games, apps and software;
– cloud-based software subscriptions;
– online courses and webinars;
– website or design services;
– memberships; and
– professional services supplied remotely.
An overseas supplier that sells these products or services to Australian consumers may need to register for Australian GST once it meets the relevant registration requirements. If so, GST may be included in the subscription cost or added when you pay.
This is why a monthly software subscription, overseas streaming account or digital marketplace purchase may include Australian GST even though the supplier has no physical shop or office in Australia.
The treatment can differ for GST-registered businesses. If your business purchases imported services, digital products or low-value imported goods for use in the business, you may be able to provide the supplier with your ABN and confirm that you are registered for GST. This may mean GST is not charged by the overseas supplier.
That does not mean the GST issue disappears. In some circumstances, a GST-registered business may need to account for GST itself under the reverse charge rules, particularly where it would not have been entitled to a full GST credit if GST had been charged. This can arise where a purchase has a private component or relates to making input-taxed supplies.
GST credits for sole traders and businesses buying online
If you run a GST-registered business, online purchases should be reviewed in the same way as purchases made in person. The key question is whether the expense is acquired for a creditable business purpose.
You may be able to claim a GST credit where:
– your business is registered for GST;
– GST was payable on the purchase or importation;
– the purchase relates to carrying on your enterprise;
– the purchase is not private or domestic in nature; and
– you hold appropriate records.
If an expense is partly business and partly private, you may need to apportion the GST credit. For instance, if you buy a laptop online that is used for both business work and personal use, only the business-related portion may be claimable.
Record keeping matters, especially for purchases through overseas websites and marketplaces. Keep copies of:
– order confirmations;
– invoices and receipts;
– proof of payment;
– shipping documents;
– import declarations or customs documentation;
– correspondence showing GST charged or refunded; and
– notes explaining the business purpose where it may not be obvious.
For taxable imports, a tax invoice is not necessarily required to support a GST credit. However, you need documents that show the GST paid on the importation and support the amount claimed.
Be cautious where GST has been charged on low-value imported goods for a business purchase. Suppliers using simplified GST registration arrangements may not issue a standard Australian tax invoice. If you are registered for GST and buying goods or services wholly for business use, consider giving the supplier your ABN and confirming your GST registration before completing the purchase.
A practical online shopping checklist
Before you place an order, it can help to ask a few simple questions:
– Is the seller located in Australia or overseas?
– Is GST already included in the advertised price?
– Will GST be added at checkout?
– Are the goods being shipped from overseas, even if the website appears Australian?
– Is the customs value of the imported goods more than $1,000?
– Could customs duty, processing charges or other border charges apply?
– Is the purchase for private use, business use or a mix of both?
– If it is a business expense, do you have the records needed to support any GST credit?
– Are you buying alcohol, tobacco or another product subject to special import rules?
Taking a minute to check these points can reduce surprises when your order arrives or when you prepare your BAS.
The key takeaway
GST is commonly payable on online shopping in Australia, but the collection method depends on whether the seller is local or overseas, whether the purchase is physical or digital, and the value and nature of the goods.
For Australian retailers, GST is usually included in the price. For many low-value imports, it is collected by the overseas seller or marketplace at checkout. Higher-value imports may instead attract GST and other charges at the border.
This article is general information only and is not personal financial or tax advice. Online purchases, imports and GST credits can produce different outcomes depending on the facts. Speak with a registered tax agent or accountant, such as, for advice tailored to your circumstances.