Avalara > Blog > Ecommerce > Australian consumers suffer limited shopping over taxes

Australian consumers suffer limited shopping over taxes


Australia now requires out-of-country online retailers that do more than $75,000 (Australian) in annual sales in Australia to collect a 10 percent Goods and Services Tax (GST) on all sales to Australian consumers. Prior to July 1, 2018, when the new policy took effect, Australia provided an exception for low-value goods: Foreign online retailers were not required to charge GST on products selling for AU$1,000 or less.

Foreign merchants must now apply the 10 percent GST on all sales of taxable goods worth AU$1,000 or less, just like their Australian counterparts. For transactions costing more than the low-value threshold of AU$1,000, GST is charged and collected at the border, instead.

How to determine if the goods are low value or luxury? Take the price of goods sold, minus any amount included for freight and insurance from the place of export to Australia. If a good is “low value” and subject to the GST, taxable charges for freight and insurance are added back to the sale price. Additional details.

Australia’s decision to tax all sales by foreign online retailers is in line with similar efforts in other countries, as well as efforts by American states to tax sales by out-of-state sellers. Nonetheless, the move wasn’t well received by certain ecommerce businesses. Both Amazon and eBay lobbied against the change, and both considered blocking Australian consumers from making purchases on their site. In the end, only one company went through with it.

Amazon blocks sales to Australian consumers

Amazon responded to news of the new tax requirements swiftly, announcing it would block Australian consumers from shopping on its American site and most other foreign sites.

According to an Amazon spokesperson (hat tip to TechCrunch), “As a result of changes to Australian GST law on 1 July, international shopping options for Australian customers will change.” It’s a business move — nothing personal — and the company regrets “any inconvenience this may cause customers.”

At least Australian consumers don’t have to live without Amazon. An Australian branch launched in December 2017 remains open to consumers in the land down under. The ecommerce giant will also allow Australians to purchase from its global store. Yet these are small consolations for avid Australian Amazon shoppers. Amazon Australia offers approximately 60 million products and the global store another 4 million — a paltry amount when compared with the 500 million products (give or take a few) available on Amazon’s U.S. site.

An old tactic in a new place

This isn’t the first time Amazon has used the power of its market share to express displeasure with tax policies. Amazon terminated its affiliate program in several U.S. states after they enacted affiliate nexus laws that required Amazon to collect and remit tax based on its connection to in-state affiliates. It happened in Arkansas, Colorado, Connecticut, Louisiana, Maine, Minnesota, Missouri, Rhode Island, and Vermont.

Over time, Amazon came to lobby for an online sales tax solution, and it now collects and remits tax on its own sales in all states with a general sales tax. However, it continues to fight the collection obligation on its third-party sales in many states. And now it has blocked Australian consumers from its American and global stores.

eBay opts to collect and remit the tax

Somewhat surprisingly given its fierce opposition to interstate sales taxes in the United States, California-based eBay has announced it will comply with Australia’s new GST policy: “We won’t block Aussie buyers, redirect them, or require them to pretend they are located overseas. Australians will continue to be able to buy from any eBay site.”

Impact on American marketplace sellers

American businesses that sell through Amazon and/or eBay marketplaces must abide by the policies adopted by those companies. Any wishing to reach Australian consumers through Amazon will need to sell through Amazon’s Australian site, at least for the time being. As it did in the United States, the ecommerce giant could eventually soften its policy and open its American site to the Australian market.

For its Australian sales, eBay is adding the 10 percent tax at checkout. It will then remit that tax directly to the Australian Taxation Office (ATO), so American merchants don’t need to register, collect, and remit in Australia themselves.

Learn more about international transaction taxes here.


Avalara Author
Gail Cole
Avalara Author Gail Cole
Gail Cole began researching and writing about sales tax for Avalara in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.