Australian Taxation Changes and How It Impacts Coloring

Australian GST Taxation Changes and How it Impacts Coloring

What is GST?

Since 1 July 2000 Australia has had a goods and services tax (GST).    Basically, this is a tax calculated at 10% of anything that is classed as “goods” or “services” that is not exempt under the legislation.     Businesses in Australia that turnover equal to or greater than $AUD75,000.00 are required to register for GST and obtain an Australian Business Number (ABN).      Businesses must then charge the GST on any items that it is applicable to, collect the GST from the buyer and remit the GST payable to the Australian Taxation Office (ATO).

The advantage for Australian businesses is that once registered they can also claim input tax credits. An input tax credit is basically a credit of GST for items that you have paid to run your business that attract GST.    This can be offset against the amount of GST that you remit to the ATO.   As you can imagine, there is a lot of paperwork involved in this system that passes the obligation to collect the tax to businesses. In addition, there are, of course, penalties for failing to comply or remit the correct amounts when due to the ATO.

Low Value Import Goods

Since the introduction of GST in Australia, there has always been an exemption for low value import goods being sent to Australia.    A low value import good is one that is equal to or less than $AUD1000.00.   In the coloring world, the type of goods that fall into the low value import good category ….is basically everything – books, pencils, markers, brushes, magazines, erasers, sharpeners, digital downloads all are classed as goods.     Most colorists in Australian would never have paid GST on any of these low value import items unless they were in the business of selling these products.   The average colorist would not have been charged for GST for items purchased outside of Australia.

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When you look at my coloring book collection, you will see that most of it has been purchased outside of Australia.     There is a simple reason for this …either it is not available here or the price is too expensive.    Most of my books are from the US, UK, Japan, Korea, Czech, Poland and Russia – they are just not available for sale in Australia.    The only items local bookstores tend to stock here are either big name brand artists like Johanna Basford and Kerby Rosanes or stock photography based books on mandalas, zentangles and the like.   Other books that bookshops may stock, I either already own or have no interest in, compared to the choice I have when buying online.

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As far as art supplies go,  I try and purchase paper, craft supplies and embellishments locally.    However, even when I purchase locally it is generally still from an online store (as most brick and mortar art supply stores in my area just do not carry the range to satisfy my needs).  I could have purchased my spare set of Prismacolors in Australia.  However, buying them on sale in the US they were still only $125.00AUD approximately shipped to Australia.    A lot less than what is currently on offer here.  In fact, the only time that I purchase luxury pencils in Australia is …..when they are on sale 🙂

Changes from 1 July 2018

From 1 July 2018, GST will be calculated on low value import goods unless an exception applies.

Please see the video, for a more detailed view of the impact on the Australian GST changes on low value import goods and how it may impact you.

How this Impacts Artists (Turnover Equal to or Greater than $AUD75,000)

Artists that turnover more than $AUD75,000.00 per annum that have an Australian buyer will be required to register for GST, obtain an ABN, collect the GST and remit it to the ATO.    This is a lot of work for an artist that is running a small business on their own.  In addition, of course, there are penalties for failing to comply.    Again, there is an administrative burden here that may be very difficult for small businesses, particularly creative ones, to cope with.    Artists should note that the amount of turnover is in Australian currency. At the time of filming this video,  the threshold amount was approximately $55,000 USD and 42,000 pound sterling.   Exchange rates do fluctuate, so it is something that you need to keep your eye on. Artists will also need to be mindful if they are approaching this amount of turnover as they are required to register for GST within 21 days of reaching the threshold.   Artists that do not reside in Australia will not be entitled to claim the GST input tax credit either.

Alternative Solution

If the artist is selling products off a platform that has agreed to remit the GST to the ATO then they can rest easy as the platform will add the GST for Australian buyers, collect it and remit the GST to the ATO.   Platforms that have indicated that they would be remitting the GST are – Etsy, Ebay, Aliexpress, and Book Depository (I’ll update this when more platforms become known to me).

What if the artist turnover is less than $AUD75,000?

If the artist has not reached the threshold then they do not charge GST, collect it or remit it to the ATO.

What about Amazon?

Amazon has decided that it will not collect the GST and remit it to the ATO.   It has taken the extra step of geoblocking Australians from purchasing from overseas Amazon sites.     Initially, this geoblocking was said to redirect Australian consumers back to the Amazon Australian site.   However, since 1 July I have been able to browse all Amazon international sites.  None of the international Amazon sites will ship to Australia though, as part of the geoblocking.  This is particularly heartbreaking …it’s like showing the kid the candy store but not letting them have any 🙁

Amazon Global

Amazon has decided that it will placate the Australian market by adding another 4 million items to the Amazon Global store.     Amazon Global has products that are traditionally stocked by the US store.      While the additional 4 million products are nic,e it hardly compares with the approximate 500 million products that Australians no longer have access to in the Amazon US store.  By using Amazon Global, Australians can access some of these products available on the US site however for most of the art supplies that you may have purchased from Amazon US in the past, you will find that they are not available or too expensive.

While Amazon Global is at least ..something it doesn’t solve the problem for colorists, like me, that buy from a range of Amazon stores.   As the inventory on Amazon Global is based on the US store, Australians are missing out on titles usually only seen on Amazon Spain, Germany, UK, France and of course …Japan.

Workaround Alternatives for Australians

Should Amazon start redirecting Australian users back to Amazon.com.au when they browse international sites, you can use a proxy server or VPN to access these sites.   However, these will only allow you to browse the international sites, they still will not ship to Australia.

In order to have low value import goods shipped to Australia from an international Amazon site you will need to either a) have a friend send it to you b) pay for a buyer’s agent c) have an alternative country mailing address and use freight forwarding.

Please see the video, for a more detailed view of the impact on the Australian GST changes on low value import goods and how it may impact you.

Happy coloring x

Lea

 

 

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