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  • #995798
    bizzwizz
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    G’day Team,
    I’m in the process of starting up an online retail store and have a few questions I need answered before moving forward. Its a shoestring start up and a long term project, but I want to make sure I go about it all the right way, minimising the costs in the process. Basically, my business model is to source products overseas and sell to my customers online in Australia.

    Essentially, I will be an importer, on an item by item request, or dropshipping to my customers from overseas suppliers.

    I will initially be starting out as a sole trader as it is the cheapest and easiest way to start trading and online retail is generally speaking, low risk. Ultimately, my business will be run through a company/trust setup for asset and liability protection.

    I am not really across GST and how it is applied in my situation and would like some advise. I will be consulting my accountant as well, but thought that this discussion might help others wanting to do the same.

    As I will be earning under $75,000, I will not be registered for GST initially. I would like some advise on pricing and applying GST with the following examples,

    Before Registering for GST

    • If I purchase a product for $800.00 and sold it to a customer in Australia for $1600.00
    • If I purchase a product for $800.00 and sold it to a customer outside of Australia for $1600.00
    • If I purchase a product for $1600.00 and sold it to a customer in Australia for $3200.00
    • If I purchase a product for $1600.00 and sold it to a customer outside of Australia for $3200.00

    After Registering for GST

    • If I purchase a product for $800.00 and sold it to a customer in Australia for $1600.00
    • If I purchase a product for $800.00 and sold it to a customer outside of Australia for $1600.00
    • If I purchase a product for $1600.00 and sold it to a customer in Australia for $3200.00
    • If I purchase a product for $1600.00 and sold it to a customer outside of Australia for $3200.00

    Thanks in advance!

    #1204008
    LucasArthur
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    Apologies, but what is your actual question? i read it as you want advice on pricing and how to apply gst for each example?

    If so, you appear to already have pricing as each example lists purchase price and sold to customer price? Also, if you are querying your GST component, you can not apply GST to any sale if you are not registered… It is also GST free it exporting to overseas buyer… if you are curious on the gst amount, its 1/11th (oops is that right? LOL) of the sold value of the item for domestic items (as you dont charge GST on exported values)..

    Cheers

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1204009
    bizzwizz
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    LucasArthur, post: 242178, member: 34537 wrote:
    Apologies, but what is your actual question? i read it as you want advice on pricing and how to apply gst for each example?

    If so, you appear to already have pricing as each example lists purchase price and sold to customer price? Also, if you are querying your GST component, you can not apply GST to any sale if you are not registered… It is also GST free it exporting to overseas buyer… if you are curious on the gst amount, its 1/11th (oops is that right? LOL) of the sold value of the item for domestic items (as you dont charge GST on exported values)..

    Cheers
    Thanks LucasArthur,
    I think I confused myself by the end of the post. Basically I want to know when to charge GST and When not too. My two scenarios are, Selling Imported Goods without GST Registration and Selling Imported Goods when Registered for GST and how the $1000 import threshold impacts each transaction.

    So is my understanding correct for the following scenarios?

    Scenario 1 – Not Registered for GST

    If I plan to advertise a product for $1600 in Australia and acquire it from an overseas supplier for $800 (including freight, handling etc) and I am not registered for GST, I am not charged GST on purchasing the product and I don’t charge GST on selling the product. I profit $800 ($1600-$800) for the transaction. The same transaction would occur if I made a sale to an overseas customer.

    Now if I plan to advertise a product for $3200 in Australia and acquire it from an overseas supplier for $1600 (including freight, handling etc) and I am not registered for GST, the product purchase would incur a 10% GST surcharge. I cannot claim this GST as an expense and the cost of the product is now $1760 and my profit would be $1440 ($3200-$1760).

    Scenario 2 – Registered for GST

    If I plan to advertise a product for $1600 including GST ($1454.55 + $145.45) in Australia and acquire it from an overseas supplier for $800 (including freight, handling etc) and I am registered for GST, I am not charged GST on purchasing the product but I charge GST on selling the product. I profit $654.55 ($1454.55-$800) for the transaction and collect $145.45 GST for the tax man. For an overseas sale, I would not charge GST and would profit $800 and not collect any GST for the tax man.

    If I plan to advertise a product for $3200 including GST ($2909.09 + $290.91) in Australia and acquire it from an overseas supplier for $1600 (including freight, handling etc) and I am registered for GST, the product purchase would incur a 10% GST surcharge of $160 and the total cost would be $1760. I profit $1149.09 ($2909.09-$1760) for the transaction and collect $290.91 GST for the tax man and I can claim $160 of that back. For an overseas sale, I would not charge GST and would profit $1440 ($3200-$1760) and not collect any GST for the tax man, but still claim the $160 as an expense.

    Am I on the right path or have I totally missed it?

    #1204010
    LucasArthur
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    Why are you saying you are not charged for GST on your goods.. being registered for GST or not has no bearing, that i am aware of, on how much you pay for goods per sae…

    I think there is more to your thoughts than i am reading, maybe? also i think your figures are out significantly on what you perceive the cost/duites etc could be when importing.. its not just GST charges its processing fees, conversion fees (currency) and a few misc depending on items…

    Overall i think you are on the right path although the minutia of the figures may not be 100%

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