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Importing - E-commerce - GST/Input Credit Calculations

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Old 07-11-2011, 03:06 PM   #1
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Join Date: Nov 2011
Location: Adelaide
Question Importing - E-commerce - GST/Input Credit Calculations

Thanks for reading, will be grateful for some clarifications.

We are establishing an import business in partnership structure to sell items in Australia online. The customers will be natural persons only, no B2B transactions are expected. And we will be selling simple clothing items, no concerns for liability, no employees etc. We need to get items in bulk into Australia, then sell online as we go.

The imported goods will be in $5k lots or at least $2k, so will have to declare as it is over $1k threshold. Since we expect the revenue to be under $75k in the first year, we had decided not to register for GST, until I read the Customs website regarding duty, GST etc...A few questions:

1-) Even if you are a small home based business and not registered for GST, does the Customs charge GST?

2-) I am not sure how to calculate the inputs credits. Do we have to be GST registered in order to claim input credits?

At the customs website they give some good examples on how to calculate duty, tax etc...For example, in this case, When buying over the internet

Example 3: An importation of goods (other than tobacco products or alcoholic beverages) valued above A$1000

Customs value (Cval) = $2000.00
Customs duty (Duty) @ 5% of Cval = $100.00
International transport and insurance or postage (T&I) = $150.00
Value of the Taxable Importation (VoTI) (Cval+Duty+T&I) = $2250.00
Goods and Services Tax (GST) @ 10% of the VoTI = $225.00
Total payable Duty + GST = $325.00

3-) But how do you calculate and claim input credits, appreciate your advice, how do input credits and claim process work? The example above is quite similar to what will happen in our case, a $2k order, having to pay $325 for duty + gst...Then, have to charge GST to customers - even though revenue is expected to be under $75, just to claim the input credits? And dont know how to calculate, plan for input credits...

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Old 19-06-2012, 11:17 PM   #2
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Join Date: May 2007
Location: Western, NSW
If you are not registered for gst you cannot claim back the gst you have paid.

so if you register and eg sell the goods for $4000 plus gst $400, in your example you will have collected $400 gst and already paid $225so you wil pay the difference of $175 when you do your Bas. You will have made a profit of $1750 - gst is disregarded

Assuming you don't register and still want to make $1750 profit, your cost including gst is $2475, you sell for $4225, so your customer who is not registered for gst saves $175 or about 4 per cent
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