Home – New Forums Logistics Australian companies have items posted from overseas to avoid GST

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  • #1133279
    James Millar
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    The extent to which there is a GST liability imposed depends on who the “importer” is deemed to be in the transaction. It will generally be the party the “enters the goods for home consumption” (basically the entity them into the country and is noted on paperwork as such).

    I’d imagine that many foreign companies subvert this by avoiding being the “importer” for the purposes of entering the goods for consumption into Australia. Rather than end retail user is the direct importer and generally applying the low value exemption.

    If they based their logistics facilities within Australia then they would be the importer and it would be very difficult if not impossible to avoid GST unless they could demonstrate that the goods were not going to be sold in Australia but re-exported again (and therefore not consumed here).

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1133280
    Hatching_It
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    Anon, post: 151394, member: 11915 wrote:
    I got i

    There t now… for example Kogan. They are an Australian website business… But they also have Kogan HK registered in China. All website sales and money through their Australian website is put through their China account to allow them to avoid paying Australian taxes/GST.

    I’d suggest having proof of such a claim before writing it on the Internet…

    Kogan Australia have used eWAY Australia to process their card transactions almost since they started – eWAY Australia only processes transactions through Australian merchant accounts, which are only issued to Australian businesses and settle in to Australian bank accounts.

    I’d suggest that the reason for Kogan HK existing would be more to do with logistics rather than tax evasion.. They’ll have warehousing and dispatch set up over there which they can no doubt do cheaper themselves rather than pay a third party company.

    There are also advantages in document fees if you’re importing all your products on one invoice, vs lots of different invoices from different suppliers but I as was mentioned above I’m pretty sure Kogan don’t hold anything locally.

    #1133281
    James Millar
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    I’d suggest in the case of Kogan that they are not the “importer” for the purposes of entering the goods into home consumption but rather the end user is. Accordingly the end user applies the low value GST exemption.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1133282
    Johny
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    It’s no different from why many (and I mean shedloads) of multinationals have large offices (subsidiaries) and staffing structures in places like Ireland, Singapore, Hong Kong etc. (And for the record, Hong Kong is far different and completely separate from mainland China when it comes to business, taxes, laws etc.)

    Forget about GST, these places have much lower tax regimes than Australia, and booking some of the profits by your overseas registered company can make a big difference in tax savings. (Got to be very careful in suggesting things like tax evasion.)

    From a savings standpoint, there is also the savings on things like shipping etc.

    #1133283
    Johny
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    “Why do they ship from china? the stuff is made there and the people your buying from dont hold any stock.”

    Although this is a very old comment I think it is something worth commenting on.

    The fact that a phone for example may be made in China is completely irrelevant when it comes to someone looking to buy said phone.

    You cannot buy say an iphone directly from the factory hat makes them, and wholesale iphones cost more in China than they do elsewhere due to the taxes applied. Many get caught in the thinking they can, and end up getting conned, so it is something to be wary of.

    And although Hong Kong is different from mainland China and you can get this kind of thing here, buying anything branded from this part of the world requires a lot of research.

    #1133284
    l0nglive
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    Hatching_It, post: 214640, member: 53049 wrote:
    I’d suggest having proof of such a claim before writing it on the Internet…

    Kogan Australia have used eWAY Australia to process their card transactions almost since they started – eWAY Australia only processes transactions through Australian merchant accounts, which are only issued to Australian businesses and settle in to Australian bank accounts.

    I’d suggest that the reason for Kogan HK existing would be more to do with logistics rather than tax evasion.. They’ll have warehousing and dispatch set up over there which they can no doubt do cheaper themselves rather than pay a third party company.

    There are also advantages in document fees if you’re importing all your products on one invoice, vs lots of different invoices from different suppliers but I as was mentioned above I’m pretty sure Kogan don’t hold anything locally.

    Yes, Logistic can be a reason. However, they in fact, do not collect GST. Two birds with one stone I guess. I understand that Anon should not make assumption how things work without evidences, but we never have such evidences from the net.

    What I’m trying to do, is to figure out how an AUS business who takes orders from Australians throw Australian banks and merchant services could avoid GST.

    I can hypothesize that Kogan AUS take orders, bill and invoice customers. Then they source products from a foreign company (can be a related party) to ship directly to customers. That would fit the example I quote from ATO website

    “Example 8 – Goods supplied by resident supplier and imported by resident recipient

    130. Joe decides to fit his car with specialised seat covers. He approaches Seat Co in Sydney to supply the seat covers. However, the seat covers have to be imported from Italy. Under the arrangements with Seat Co, Joe imports the seat covers into Australia and pays Seat Co for the goods once the seat covers are cleared through Customs. The supply of goods, specialised seat covers by Seatco to Joe, is not connected with Australia because the goods are not delivered, or made available to Joe, in Australia. However, Joe makes a taxable importation upon which GST is payable.38″

    Lets paraphrase it

    130. Customer Joe decides to buy a smartphone. He approaches Kogan in Melb to supply the phone. However, the phone have to be imported from HongKong. Under the arrangements with Kogan, Joe imports the phone into Australia and pays Kogan for the goods once the phone is cleared through Customs. The supply of goods, phone by Kogan to Joe, is not connected with Australia because the goods are not delivered, or made available to Joe, in Australia. However, Joe makes a taxable importation upon which GST is payable. “

    (this case, it’s below 1000$ -> no tax for JOe. Goods not connected to AUS -> no tax for Kogan)

    Make sense to me.

    #1133285
    Hatching_It
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    Well there you go, admittedly it’s been a while since I actually bought from them and but there seem to be a number of threads on a prominent tech forum suggesting that they no longer issue invoices from Kogan Australia and that the buyer does in fact act as the importer.. So I apologise, I was wrong.

    #1133286
    l0nglive
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    Actually, they do not do a good business. So many bad reviews. They are not AUS owned/operated. Some rep can’t even speak English properly.

    You are right Jason. Low price is not enough.

    Eventually I found [Brand name removed] who also sources products from HongKong, but they seem to be more legit.

    #1133287
    bb1
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    l0nglive, post: 214823, member: 57029 wrote:
    Actually, they do not do a good business. So many bad reviews. They are not AUS owned/operated. Some rep can’t even speak English properly.

    You are right Jason. Low price is not enough.

    Eventually I found [brand name removed] who also sources products from HongKong, but they seem to be more legit.

    So why do you believe they are not legit, that’s a big statement to make

    #1133288
    LucasArthur
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    bb1, post: 214833, member: 53375 wrote:
    So why do you believe they are not legit, that’s a big statement to make

    Im more curious how this post turned into a plug for a mobile phone seller?

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
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