I am starting to sell some t-shirts (low value good) to consumers in Australia which are print on demand and are supplied through a dropshipper (based in USA). I am not registered for GST nor required to be registered for the GST.
The dropshipper is charging me GST based on my retail price (amount I sell it for to the general public) rather than the amount it charges me for the t-shirt.
For example, if I receive an order for a t-shirt which costs $20 and I sell it for $30, the dropshipper charges me GST of $3 and not $2. Is that not overcharging it?
I tried to look at the ATO website but it is not very clear.
A couple of years ago our government made it so GST has to be collected by larger businesses overseas (many countries are doing it now) and they are considered the supplier even if they have individuals with their own businesses using them. I don’t think I have explained that properly, but anyway, they are required to collect GST from people/businesses who use them and remit it to our government.
Yes, they charge on the retail price and you just have to take that into account in your pricing because you can’t claim it back as you aren’t GST registered (this is why I encourage small businesses who are not GST registered to register anyway, whether they need to or not).
All larger foreign business with sellers selling to Australia have to do this including places like Ebay, Amazon and any others that sell more than $75,000 into Aus etc.
Rowan is spot on. GST is determined on the value of the goods supplied to the importer (your customer, not you). The US shipper is for these purposes, treated as the seller. Because they are selling regularly to private customers in Australia, they must collect GST.