indirect tax - deferral of gst
The Australian Taxation Office (ATO) operates a scheme that provides for the deferral of GST on imported goods. The Deferred GST Scheme covers GST only; it does not impact upon Customs duty, which must still be paid at the time of importation.
Scope of the scheme
Deferral of GST on imported goods extends to all importations that are entered for home consumption ("home consumption" means that the goods enter into the commerce of Australia), either at the time of importation or from a Licensed Customs Warehouse. The scheme also covers amended import declarations where GST is payable. Goods in the following categories are excluded from the scheme:
- Goods imported under the TRADEX scheme that are diverted into home consumption;
- Low value imports cleared on self-assessed clearance (SAC) declarations
- Goods imported temporarily under Customs Act s162 or s162A.
How does the scheme operate?
- Importers approved as GST deferrers must electronically communicate to Customs.
- When goods are entered for home consumption, the owner is required to quote the owner's Australian Business Number (ABN) to Customs. If the owner is approved to defer payment of GST, the imported goods will be released after any customs duty or other charges are paid. Customs records the GST liability of each importation as it is finalised.
- Customs advises the ATO electronically of the aggregated liability for each owner as determined by the Integrated Cargo System (ICS).
- The ATO includes the total amount of GST that was deferred during the previous month on the owners next Business Activity Statement (BAS). The ATO then issues the BAS to the owner via the internet.
- The BAS is due to be lodged and paid by the 21st day following the month in which the GST was deferred. [If all the importations for the period are creditable importations, an input tax credit can be claimed in the BAS, which will effectively offset the deferred GST liability.]
Admission to the scheme
Owners must be registered for GST and must apply to the ATO for approval to participate in the Deferred GST Scheme. Owners not admitted to the scheme will be required to pay duty and GST at the time the goods are entered for home consumption or otherwise dealt with under the Customs Act 1901.
Owners must lodge Business Activity Statements monthly
Owners who elect to or are required to lodge their Business Activity Statements (BAS) monthly may apply to participate in the Deferred GST Scheme.
Owners must deal with the ATO and Customs electronically
Owners may apply to participate in the Deferred GST Scheme if they lodge their BAS via the internet-based, e-commerce system operated by the ATO. Owners can deal electronically with Customs either directly, or through a licensed customs broker.
The ICS does not allow deferral on entries that are lodged manually. Payments of GST on SAC declarations and debit notes cannot be deferred. It is a condition of the Deferred GST Scheme that owners must deal with Customs electronically. This condition is contained in regulation 33-15.06 of A New Tax System (Goods and Services Tax) Regulations 1999 and it is also stated in Australian Customs Notice (ACN) 2000/14. Owners must either use the services of a licensed customs broker or arrange to obtain a digital certificate and communicate to Customs electronically through Customs Interactive (ICS interface). To make arrangements for the connection, contact the Customs Systems Support Centre on 1300 558 099.
Owners must have a good compliance record
As a general principle, owners wishing to participate in the Deferred GST Scheme must not have any outstanding debt or returns with the ATO.
Disqualification from the scheme
Owners may be removed from the Deferred GST Scheme if they:
- fail to lodge their Business Activity Statements by the due date;
- fail to pay their ATO obligations by the due date;
- are subject to administrative penalties under any Act administered by the Commissioner; or
- no longer meet the eligibility criteria on an ongoing basis.
Readmission to the scheme
Owners who have been removed from the deferral scheme may be readmitted if:
- they satisfy the rules for admission to the deferral scheme; and
- they obtain a bank guarantee in respect of any future liability for GST on imported goods.
How can I apply?
An application form for approval to defer GST on imported goods is available on the Australian Taxation Office website. Owners can apply to participate on-line at www.ato.gov.au.
How does the Integrated Cargo System handle the deferral of GST?
If an entity has an ABN approved for deferral, the ICS automatically defers ALL GST payable on an import declaration. The ICS calculates the amount of GST to be deferred and this appears on the duty, taxes and charges screen for the import declaration in the ICS. The deferred GST amount (where applicable) appears on the import declaration advice.
You are not able to elect to defer GST on specific import declarations. If you are approved to defer, then GST is deferred on all lines for every import declaration. Customs Duty is not deferred; it is payable prior to the goods being delivered into home consumption.
The total amount of GST that has been deferred for an ABN is aggregated by Customs and passed to the ATO.
Which entries are captured in the deferred GST amount passed to the ATO?
Customs informs the ATO about all amounts of GST deferred on:
- Import declarations for home consumption that were finalised* during the month.
- Amended import declarations (these correct errors on earlier import declarations for home consumption) that were finalised* during the month (provided that GST was deferred on the original declaration).
Please note that, where an amended import declaration reduces the amount of GST deferred, this deferral reduction will be reflected in your BAS only if the amendment was to a declaration that was finalised* in that same month.
* Import declarations are finalised when customs releases the goods. Note that this may be different from the date that funds were debited against the owner's bank account for duty and/or other charges.
Do I have to be connected to Customs Electronic Funds Transfer (EFT) system to participate in the Deferred GST Scheme?
No. As long as goods are entered for home consumption using the ICS you can participate in the Deferred GST Scheme. Many owners are connected to the Customs EFT system to make importing a more seamless process. (In fact, 97% of electronic import declarations are paid using the Customs EFT facility). However, if goods are entered electronically but paid by cash or cheque, then deferral is also allowed.
Are Wine Equalisation Tax (WET) and Luxury Car Tax (LCT) included in the Deferred GST Scheme?
No, WET and LCT are not included in the Deferred GST Scheme; it only applies to GST.
Owners can quote for WET or LCT at the time of importation if they are registered for GST and meet the grounds for quoting.
Quoting for LCT
From 1 July 2008 the rate of LCT increased from 25 per cent to 33 per cent for cars valued over the LCT threshold ($57,180 for the 2008-09 year). The legislation to increase the rate of LCT also makes available some new concessions including an exemption from LCT for certain fuel efficient luxury cars. More information can be found at ACN 2009/41.
An exemption code "FEV" is available in ICS to enable importers of fuel efficient luxury cars with a value below the FEV threshold to claim the luxury car tax exemption when an import declaration is lodged.
Further information regarding Fuel Efficient Luxury Cars is available on the ATO website or by contacting the ATO on 13 28 66.
How does GST deferral work for companies that have a branch/division structure with the branches electing to complete individual BAS?
Each branch has an ABN and GST branch number. Each importing branch that wants to be on the Deferred GST Scheme must apply for GST deferral and be approved for GST deferral individually. The importing branch then uses its ABN plus GST branch number on the Customs import declaration.
How does GST deferral work for GST Groups?
It is not necessary for all members of a Group to apply for admission to the deferral scheme. If a Group member wishes to defer they must apply to defer and the Group representative must also apply. In others words, if a member is in the Deferred GST Scheme then the Group representative must also be in.
If another Group member does not want to defer, they pay GST at point of lodging import declarations. The Group representative can claim an input tax credit for the GST paid at importation.
Once admitted to the Deferred GST Scheme, each Group member should use its own ABN on each import declaration. Customs advises the ATO of the amount of GST deferred by each member of the Group. The ATO consolidates these amounts into one total and inserts it as a liability on the BAS for the representative member. This liability may be offset against the input tax credits available to the Group members for any creditable importations (or creditable acquisitions) they have made.
How can an importer obtain transaction details to reconcile with the aggregate figure included on their BAS by the ATO?
The GST Deferral Report is available on a self-serve basis through the Integrated Cargo System (ICS). The GST Deferral Report contains a breakdown of the GST Deferred amount required for the Australian Taxation Office Business Activity Statement. These reports can be obtained by the importer (or customs broker that acts on behalf of the importer) on a self-serve basis through the ICS. Email requests for these reports will no longer be processed by the Australian Customs and Border Protection Service.Importers can either obtain the reports by:
1) Accessing the Integrated Cargo System (ICS); or
2) Requesting the report directly from their customs broker.
How to access the Integrated Cargo System (ICS)
To access the ICS a digital certificate is required.
Importers can purchase two types of Australian Business Number – Digital Signature Certificates (ABN - DSCs); Authorised Officer (AO) ABN-DSCs and Standard ABN-DSC. The number of certificates you purchase will depend on how many people require them within your organisation. An Authorised Officer (AO) ABN-DSC has the authority to request certificates to be issued to other members of an organisation. When purchasing a digital certificate at least one AO must be appointed. An AO ABN-DSC can be purchased for $187.00 (Inc. GST).
A standard ABN-DSC certificate is the same as an Authorised Officer certificate, however are used by staff within your organisation to access the ICS. A standard ABN-DSC can be purchased for $93.50 (Inc.GST).
Importers should allow six working days for processing a new digital certificate request (provided all the information is correct at the time of lodgement). All certificates have a validity period of two years.
Additional information to assist first time users in connecting to the ICS and addressing some of the more common questions can be found at: First time users
Comprehensive information on the different types of digital certificates available for use with ACBPS can be found at: Digital Certificates
Digital certificates can be purchased through VeriSign at: VeriSign
A user guide on how to request reports through the ICS can be found at: ICS Reports
Requesting the report from the importers customs broker
Importers who use the services of customs broker can request a GST Deferral Report for their ABN from their customs broker. Where more than one customs broker is used by an importer, a request will have to be made to each in order to obtain your complete information.
For further information or clarification on the detail covered in this notice, please email firstname.lastname@example.org