Deferred gst how does it work

The importer is liable for GST regardless of whether it is registered or carrying on an enterprise. The timing difference means the importer may be out of pocket for almost two months if a monthly lodger or almost four months if a quarterly lodger. In some cases, a GST-registered importer will not be entitled to input tax credits for the imported goods. This occurs when the imports are made in relation to input taxed or private or domestic supplies.

The GST deferral scheme allows approved entities who are monthly lodgers to defer payment of GST on their taxable importations until the 21st day of the following month. If the importer is approved to access the deferral scheme, it must pay customs duty and other charges, but not GST, before the ABF will release the imported goods.

Here is an example. Haibo Pty Ltd Haibo imports dog food to sell in its pet shop, entering it for home consumption on 1 April Haibo is registered for GST. An importer must first change its GST reporting period to monthly if necessary and then apply to the ATO for approval to access the deferral scheme. Ordinarily, the change to monthly reporting will take effect from the first month of a quarter. So, if the importer makes the election in May , the change will take effect from 1 July The importer will then need to lodge BASs for each month in the June quarter.

This can have a significant negative impact on your cash flow. Importers can typically claim credit for the GST paid at some later date. However, when the cargo arrives at customs, you must have the funds straight away to pay the GST at the time of import. The result of deferring that GST is that you can start selling your goods to customers immediately without being required to pay the GST when the goods arrive in Australia.

To be eligible for the scheme, you must satisfy the following criteria:. You may, however, be ineligible to join the scheme if you do not pay your tax return and make your tax payments on time. You may be removed from the scheme if you do not pay your monthly BAS on time. These include convictions or penalties in relation to tax, customs, fair trading, trade practices, inaccurately describing goods or committing fraud against a government organisation.

Cash flow is probably at the forefront of your mind if you are importing goods into Australia. Monthly BAS statements are completed within 21 days from the end of the month. By deferring the GST, you can gain access to your goods from customs straight away and then immediately start selling them to your customers. You can claim a GST credit and then pay it later.

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