The Fair Imports Alliance, a coalition of retail and wholesale industry groups, has hit out at Customs for the way import tax is being handled.
Currently, items that are shipped into the country are exempt from goods and services tax (GST) if they are worth less than $1,000. The alliance claims some retailers are using this rule to ship in products tax-free by falsely claiming under the threshold.
The $1,000 GST exemption is under review by the Australian Productivity Commission, independent research and advisory body, with submissions for its review closing tomorrow.
Earlier this week, Fair Imports Alliance spokesperson Brad Kitschke criticized Customs for delaying the release of its Enhanced Compliance Campaign report with the deadline looming. The document summarised the agency’s efforts to clamp down on undervalued imports and shipments that were deliberately broken up to avoid taxes.
“People know they can value a package under $1,000 and avoid paying tax, and most of the time they don’t get caught. We know there are overseas websites that advertise they will deliberately undervalue packages, which are over $1,000 in value, to avoid the application of taxes and duties. This practice is widespread and we have provided examples of these websites to Customs,” said Kitschke.
The Customs campaign focused on self-assessed clearance (SAC) declarations, which are forms submitted online, or via an authorized broker, that connects to the Integrated Cargo System.
The SACs are required to clear goods imported by air and sea that are below the $1,000 threshold.
In the first three months of this year, Customs investigated over 31,000 cases and found 1,624 items with a SAC that required a full import declaration – from undervaluation, bulk orders, and split consignments. The revenue implication from this was more than half a million dollars
In addition, over 33,000 pieces of international mail were investigated, with 338 shipments amended, resulting in a revenue implication of $92,942.
Kitschke claims that Customs was unable to provide any information about fines being levied on importers undervaluing goods, and went on to call the agency a ‘toothless tiger’.
“If you are going to have a rule or a law, you need to police it, you need to enforce it and you need to apply sanctions when it is broken. Customs is not doing any of these things. If you deliberately undervalue imports and you do it regularly, such as businesses taking advantage of the threshold, you should be subject to a penalty,” added Kitschke.
After viewing the report, the Fair Imports Alliance has sent in its own submission to the inquiry, calling for a removal of the $1,000 threshold – which would see all imports subject to GST and duties.
The alliance estimates that $460 million per year is being lost in uncollected taxation as a result of the threshold. The group is also asking for funding for domestic retailers to better compete online, tariff reductions to allow continued access to cheap imports, a dedicated minister for the retail sector, and the official branding of domestic online retailers as ‘Australian’.
“The Government needs to act now to ensure that the sector is able to transition and businesses can reengineer to take advantage of the new marketplace. It was disappointing that the most recent budget cut the $15 million AusIndustry Small Business Online (SBO) program which helped Australian SMBs get online. With all the investment in the National Broadband Network (NBN) it would have been pertinent to see some money to help retailers get online ahead of the national rollout,” continued Kitschke.