Announcements
Worried you’re missing part of your refund? Remember, the low and middle income tax offset isn’t a refund on its own – it’s used to offset (or reduce) the amount of tax you pay. The offset amount you may be entitled to is automatically applied and could range between $255-$1080, depending on things like your taxable income and how much tax you’ve paid.
Still not sure? Ask the Community

ATO Community

Re: Online Business applying GST on postage

Initiate

Replies 0

Exactly. Some businesses are adding the postage cost which already includes GST. And then combining that amount the the purchased goods amount, THEN charging GST, so the postage component has been charged GST twice. That's surely wrong.

I'm new

Replies 2


@AmandaE wrote:

 

"Unlike international transport"

 

If I purchase an item from OS is GST charged on the postage?    "International Mail" is on the excluded list

 

Thanks

Newbie

Replies 1

Hello All, Thought I might as well wade into this discussion as I am currently experiencing the same issue, only from a sellers point!

I am a hobby seller, very small, and I sell hand made goods  through a worldwide craft e-commerce platform. I pay commission on my sales to the  e-commerce provider, since the introduction of auto collection of GST, thing have become quite complex.

I recently made a small sale (domestic), the e-commerce company charged me their fee, (normal), on the value of my product, they then added a fee for my shipping (this is for postage that I purchase and pass the cost onto the buyer), then they added GST for the goods price, (yes I understand that), and then GST for the shipping cost, ( I paid GST when purchasing my shipping via AusPost).  They physically do not handle or see the goods in question,

To my utter confusion I was also charged VAT on the entire transaction,  I receive no proof that the respective amounts they charge me are paid to the relevent government bodies.

I am wondering why I am now paying two lots of GST on  domestic postage, and am now left with having to precalculate the double lot of GST and Vat and add to the postage and selling price of the goods.   

 

This does not seem correct to have to pay GST twice, can someone clearly clarify as the e-commerce platform is adament they are correct!

Former Community Support

Replies 0

Hi @Neosmum,

 

Thanks for getting in touch!

 

Further to the information provided above, if you're registered for GST you can claim any GST you've been charged on your business activity statement. You can find more information about GST on our website.

 

If you have further questions about GST you can phone us on 13 28 66 between 8am - 6pm, Monday to Friday to speak with an operator.

 

Thanks, JodieH.

Former Community Support

Replies 4

Hi @melweezer and @jubeman,

 

Thanks for your questions.  I have sent your request off to a specialist area, I will come back to you with a response ASAP.


Thanks, JodieM

 

ATO Certified Response

Former Community Support

Replies 3

Hi everyone,

It’s great to see everyone’s checking their receipts to make sure they’re paying the correct amount of GST! There’s been a fair bit of back and forth on this topic, so we’ve included some examples as part of our answer to try to make this easy to understand.

 

If you purchase a product online and arrange to have it delivered, costs associated with the delivery are a necessary part of the sale of the product. Retailers treat delivered goods as an ‘integrated supply’ – the supply includes the product you’ve purchased as well as costs associated with selecting, packing and delivery your product.

 

How the retailer calculates the GST on the delivered product depends on whether the product is taxable, non-taxable or a mixture of the two. The following table from Goods and Services Tax Determination GSTD 2002/3 Goods and services tax: how do I account for G...? explains the formula retailers use to calculate GST on the delivery of goods:

Type of goods supplied

GST payable

All goods supplied are taxable

1/11th of the total cost including the delivery fee. No apportionment is required.

All of the goods supplied are non-taxable

Nil

Goods supplied include both taxable and non-taxable goods

1/11th of the price of the taxable items, plus 1/11th of the portion of the delivery fee that relates to the taxable goods.

 

Example 1 – Domestic supply - Goods sourced from Australian warehouse

Let’s say you bought a single chair online that’s worth $80 from a retailer who warehouses the goods in Australia. The chair is considered to be a taxable item – that is, GST will be applied to this sale.

Because the retailer doesn’t have a store front, the only way to get your chair to you (a condition of the sale) is to post it in a large box. Due to the product’s size, the retailer has to purchase $22 postage (GST inclusive) to have it shipped to your address.

 

As this is an ‘integrated supply’, the retailer adds the cost of the postage to the cost of your chair on the invoice.

 

They should calculate the total cost to you as follows:

Chair

      $80

Postage/delivery cost

      $20

Total without GST

    $100

                                                                   GST 10%

      $10

Total inc GST

     $110

 

The retailer only charges $20 for postage because they’re entitled to claim a GST credit from the ATO. On their next activity statement, the retailer completes the following calculation and pays us the difference in GST paid and collected:

GST paid to business

     $10

GST to be claimed by business

       $2

Total to be paid to ATO on activity statement

       $8

 

Example 2 – International delivery - goods sourced from overseas warehouse

This is the same scenario, but this time the company you bought your $80 chair from stores the goods outside Australia. For this example you have purchased your chair using an electronic distribution platform (think etsy) and the retailer has agreed to deliver the goods to your nominated delivery address in Australia.

 

The retailer you bought it from purchases $20 for international postage. The retailer is not charged GST by the foreign postal organisation because international post to Australian delivery addresses is GST-free.

 

Chair

      $80

International Postage/delivery cost

      $20

Total without GST

    $100

                                                                    GST 10%

      $10

Total inc GST

    $110

 

Changes to Australian tax law means that the electronic distribution platform (EDP) we mentioned above is required to be registered to collect GST on the retailer’s behalf. Most EDPs will add GST in at checkout therefore increasing the list price by 10% prior to purchase. The EDP is responsible for sending the GST to the ATO and not the retailer.

 

Because GST doesn’t apply to international delivery, no entity is entitled to claim a GST-credit on for international post on their activity statement:

GST payable by EDP

     $10

No GST credit for retailer on international post

       $0

Total to be paid to ATO on activity statement

     $10

 

Under Universal Postal Union agreements between international postal agency and Australia Post, the foreign postal organisation will pay Australia Post a portion of the amount received for international delivery. The postal services by Australia Post to the foreign postal organisation are also GST-free.

Initiate

Replies 2

So the latest advice basically proves our point.
Businesses are not itemizing postage with gst excluded. They are listing the gst included postage, then adding gst for the full amount (product + gst included postage). So we the customers are paying gst twice for the postage component. This is because usually the business charges the standard Aust post rates which are gst inclusive.

I'm new

Replies 1

From a sellers perspective this has been somewhat a regular issue for me also. With customers saying why GST is added on freight.

I will share an example of what I mean, lets say a customer who does reside in Aus has purchased a box of photo frames for $50.00 inclusive of gst. He then wants to add freight which is all good, I contact our third party freight provider in TNT, grab the pricing quotation which preceeds to be $25.00. So im sure we all agree that the total cost i charge is $75.00

 

my invoice then looks somemthing like this....    Photo frame - $45.45 exc, Freight - $22.73 exc

Subtotal -  $68.18

GST - $6.82

Total - $75.00

 

After all this the customer says why have you charged gst on freight.....

Its a regualar ongoing thing and all i can say is that i have calculated the gst prior, when they already knew that full freight cost was $25.00. Anyway, am i doing it wrong?? because i would love to know what others think 

 

 

 

 

ATO Community Support

Replies 0

Hi @Makaveli

 

I believe this thread you have replied on has an explanation on how GST should be charged on items with freight. I have linked the part of the thread which contains the calculation it appears under the heading GST on postage on online purchases.

 

The link contains the following calculation:

 

Example 1 – Domestic supply - Goods sourced from Australian warehouse

Let’s say you bought a single chair online that’s worth $80 from a retailer who warehouses the goods in Australia. The chair is considered to be a taxable item – that is, GST will be applied to this sale.

Because the retailer doesn’t have a store front, the only way to get your chair to you (a condition of the sale) is to post it in a large box. Due to the product’s size, the retailer has to purchase $22 postage (GST inclusive) to have it shipped to your address.

 

As this is an ‘integrated supply’, the retailer adds the cost of the postage to the cost of your chair on the invoice.

 

They should calculate the total cost to you as follows:

Chair

      $80

Postage/delivery cost

      $20

Total without GST

    $100

GST 10%

      $10

Total inc GST

     $110

 

Links

GST on postage on online purchases