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Low Value GST Import Threshold is up for Review

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Most Australian bicycle industry members will probably remember the long and hard fought battle that was waged for years to persuade the government to change its policy regarding charging GST on imports.

Just in case this was before your time or the memory has faded, here is a recap…

Prior to 1st July 2018, the importer of any item of less than $1,000 in value did not have to pay GST on that item. Specific to the bicycle industry, that meant that customers buying bicycle components from major international mail order companies such as Wiggle, could avoid paying any GST, effectively putting the Australian retailers at a 10% disadvantage.

There were loud calls from Australian bike industry wholesalers and retailers for ‘a level playing field.’ So this became a major government lobbying campaign for several years, led by the industry funded trade association, BIA (Bicycle Industries Australia) and forming alliances with other industries that were also impacted.

There was also much speculation and discussion at that time on what the new low value threshold should be, with most speculation that it would be somewhere between $30 and $100.

In the end, the government decided that there should be no minimum threshold value. Therefore all goods imported, whatever the value, would be subject to GST.

Another key change was that instead of the GST being collected at the border, it was now required to be collected by the supplier at the time of sale.

This was announced in the 2016/17 Budget, at which time it was also announced that the new arrangements would be reviewed after two years.

After a year’s delay on the government’s side, the new arrangement was not finally introduced until 1st July 2018. It’s now just been announced that the review will take place by the Board of Taxation.

The Board has released a consultation guide to explain the review process and guide stakeholders on how to contribute. It also poses a number of questions for interested parties to think about when formulating input to the review.

The Board of Taxation review will specifically address, among other elements:

  • The effectiveness of the LVIG (low value imported goods) regime with reference to its policy intent of the law, being that low value goods imported by consumers face the same tax regime as goods that are sourced domestically
  • The effectiveness of the administration
  • Industry compliance

You can see the consultation guide and Terms of Reference for the Review here.

Anyone is welcome to make a submission to the review in writing prior to 22nd September 2021.

There will also be online round table consulting sessions to be held in August and September.

The Board has been asked to report back to the federal government by 17th December 2021.

If you would like further information, please contact the Board of Taxation Secretariat at LVIG@taxboard.gov.au or +61 2 6263 4366.

Join the Conversation

What do you think that the outcome of this review should be? What changes, if any, would you like to see made?

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