Please refer to the Australian Taxation Office Website for a full explanation of Goods and services tax (GST) on Imported Goods.
GST is payable on most goods imported into Australia. GST is payable by businesses, organisations and private individuals, whether they are registered for GST or not. However, if organisations are GST-registered and import goods as part of their activities, they may be able to claim a GST credit for any GST paid on those goods.
How do you pay GST on imports?
The Australian Customs Service (Customs) collects GST on taxable goods imported into Australia. The GST payable is 10% of the value of the imported product. The value of the product is the sum of:
- the customs value of the goods
- any customs duty payable
- the amount paid or payable to transport the goods to the port or airport of final destination in Australia (or the place in Australia to which goods are posted)
- the insurance cost for that transport, and
- Any wine equalisation tax payable.
When do you pay GST on imports?
Generally, GST is payable before the goods are released by Customs. The importer pays at the same time, at the same place, and in the same manner as they would customs duty (if the goods are subject to customs duty).
If the importer is registered for GST, they may be able to defer the payment of GST by participating in the deferred GST scheme. The scheme allows them to defer the payment of GST on taxable importations until the first activity statement they lodge after the goods are imported.
How do you claim GST credits?
Unless you have deferred, you pay GST when you import goods. If you are registered for GST, you claim GST credits on imported products in the activity statement you lodge for the tax period in which you pay the GST on that product.
Before you can claim a GST credit, you must have documentation showing the goods have been imported and have entered Australia for home consumption (that is, GST has either been paid or deferred). Goods are entered for home consumption when Customs releases them for use in Australia.
How to Process the GST component in JCurve
- You can choose to exclude the Tax Code GST:NA-AU so that it does not display on Tax Reports. Alternatively you may like to include this code so you can review transactions using the GST:NA-AU code as it does not appear on the BAS report.
a. Navigate to Setup > Accounting > Tax Codes
b. Ensure the Exclude from GST Reports is Checked to stop this code appearing on reports.
2. Set the Vendor Record Tax Code as GST:NA-AU
a. Navigate to Lists > Relationships > Vendors > Financial Tab
b. Set the tax code to GST:NA-AU
3. Setup a GST on Imports Clearing (expense) account to be used when processing the customs invoice. Note this account will normally have a zero balance.
- Process the Overseas Vendor Invoice as GST:NA-AU
a. This will ensure that the value of the purchase does not appear on the BAS in G10 or G11
b. The vendor invoice can be processed as a new bill or matched to a Purchase Order.
2. Enter the Customs Bill with the Calculated goods value( 10 times the GST) and the GST as calculated by the Customs Department
a. Use an expense account, e.g. “GST clearing account” to ensure the product cost nets to zero
b. Enter the amount of the purchase as 10 times the GST amount quoted by the Australian Customs Department. Eg if the GST is $1000 then the gross amount = $11,000.
Note: This can be different from the actual purchase from the vendor due to exchange rates, addition of freight charges and other Australian Customs estimates in calculating the deemed purchase price.
c. Apply the GST code to ensure the purchase appears on G10 or G11 of BAS
i. GST:NCT-AU – Non Capital Taxable Purchase
ii. GST:CPT- AU - Capital Purchase Taxable
d. Enter the negative purchase price to the same account, and ensure that the GST code is GST:NA (as this will not appear on the BAS). Note the negative gross amount is excluding the GST.
e. Use the items tab to record any landed costs that may are on the same invoice.
3. Current Period BAS shows the Purchase value as calculated by Australian Customs and in accordance with ATO guideline
a. Purchase value of $10,000 as per Australian Customs , instead of the Vendor Bill of $9,500.00 (US)
b. GST of $1,000 included on BAS
ATO requirements on BAS preparation extracted from NAT 7392: For taxable importations, report at G10 or G11 (depending on whether the goods are capital or non capital items) either:
- the sum of the following:
- the Customs value of the goods imported
- the amounts you have paid or are liable to pay:
- for the international transport of the goods to their place of consignment in Australia (if not included in the Customs value), and
- to insure the goods for that transport (if not included in the Customs value)
- any Customs duty you are liable to pay in relation to the importation of the goods
- any wine tax you are liable to pay in relation to the local entry of the goods, and
- the GST you are liable to pay on the taxable importations, or
- The GST you are liable to pay on the imports, multiplied by 11.
GST on Purchases Report grouped by Tax Code
4. Reports > Saved Reports > GST on Purchases Summary (choose Accrual or Cash based)