Australia: Results of the Low Value Import Relief review

The final report of the Low Value Parcel Processing Taskforce (“the Taskforce”) was recently released by the Australian authorities.

In a previous report in 2011 the Productivity Commission found that the low value import exemption threshold for GST and duty on imported goods (currently set at AUD 1’000) was not the main factor affecting the international competitiveness of Australian retailers (this is a totally opposite conclusion than the one made by the EU – see here for more info) . The Productivity Commission advised that there could be grounds to reduce the low value import relief threshold, but it is not cost-effective to do so without streamlining the procedure of processing low value parcels.

The Taskforce was therefore commissioned to check the alternatives for efficient approaches for handling and administrating the increased number of low value imports, including options for collecting GST and duty.

In its report the Taskforce highlighted that the proportion of collection costs to GST revenue increases as the threshold falls below AUD 500, indicating that revenue collection would not be cost-effective at a threshold level less than AUD 500.

The Taskforce outlined a possible three phases reform program that could be implemented over the coming years. This include Government assessment of the current report and legislative reform; the redesign of the physical and IT infrastructure, education and community awareness campaigns; and finally reform assessment and extension.

The report made no recommendation as to what threshold should apply to a simplified GST assessment arrangement but it is recommended that due consideration be given to a staged introduction to ensure a smooth and efficient transition.

What does this mean for you?

If you make parcel deliveries to Australian customers, you should keep monitoring the Australian low value import relief developments.

Decrease of the importation threshold might add GST costs to your Australian customers and thus decrease your competitiveness against local retailers.

Or alternatively, if your business model includes importing goods in Australia and shipping it locally to your Australian customers, you might wish to explore the benefits of the low value import relief. You can find some related ideas here.