Last July, Australia changed its sales tax law to level the playing field between international sellers and domestic ones. Previously, Australia’s sales tax, the GST (Goods and Services Tax), was not collected on physical items purchased outside Australia for less than AUS $1000 (“low-value goods”) and imported by the consumer. This allowed Australians to save money by buying off international websites, especially ones that provided free shipping or a price low enough to offset the shipping costs. But it also hurt those Australian businesses that do have to charge sales tax, rendering them less competitive. In response, Australia changed the law so that all items, regardless of value, must have the GST applied, collected, and remitted by the seller unless the item is exempt or zero rated. Books are neither.
In response to the changes in Australia, Amazon shut out Australian buyers from the Amazon.com site, redirecting them to a new Amazon.com.au site. Third-party sellers also found themselves shut out. Backlash from consumers was swift. By November 2018, Amazon had done a one-eighty and reopened the Amazon.com site to Australians.
But third-party sellers still found themselves shut out: their products didn’t appear to anyone browsing from an Australian ISP. Instead, in December 2018 Amazon set up a fulfillment warehouse in Sydney, and now third-party sellers must open an account directly with Amazon.com.au in order for your products to be available to Australian buyers. But that requires Amazon Advantage or Fulfilled By Amazon sellers to ship to the warehouse in Sydney. Doing so is expensive, which would force you to increase your price to a value that may be unpalatable to your buyer. Marketplace sellers are charged a hefty AUS $49.95 plus 10% GST per month. So no matter which avenue you choose, if you only sell a few items a year to Australians, the math simply doesn’t add up.
So what can you do? Can you just sell directly off your own website and ship to Australia without collecting the sales tax? Can you set up accounts with rival websites like eBay? The short answer is yes, but there are caveats.
After communicating with both the Australian Tax Office and the Australian Border Force (ABF), I can tell you this: Under the new rules, any foreign person or company that sells/ships less than AUS $75,000 worth of goods to Australian addresses does not have to collect and remit the GST. The $75,000 threshold is annual and applies only to those sales to Australian consumers; your annual worldwide sales are not factored in.
So what happens, then, to any books you might sell to an Australian consumer? Are these books tax free? No. Your customer still has to pay the GST, but they will do so directly when they import the item. And this is where how you send your book to Australia really makes a difference to your customer.
When you ship your book to Australia using your national postal service, you will fill out a customs declaration form that is attached to the package. On this form you will identify the contents (“book”) and its value in the currency of sale (for example, USD $20.00). (Don’t undervalue your goods since a quick check of your website will reveal the true value and then you will have caused problems for your customer.) You pay the postage and off it goes. That’s all you have to do.
(If you are sending the book for free as a giveaway, you still have to declare its full retail value, but you will specify that the book is a gift/promotional item.)
As per international postal agreements, when the book then reaches Australia, the Australian Border Force takes temporary possession of the package. There is no need for anyone to hire a customs broker. Your customer does not need to supply the ABF with a self-assessed clearance (SAC) form. Instead, the ABF simply converts the combined value of the book and the shipping fee into Australian dollars and applies the 10% GST to it. The ABF attaches the GST declaration to the postal tracking card; this GST is then collected from the consumer by the post office when the package is delivered (or the customer attends at the post office to pick up the package).
But if you use a courier to ship a book to Australia, you will really burn your customer. This is because anything sent by courier must be cleared by a customs broker.
You will be asked by the courier — UPS, for example — to supply your customer’s phone number; when the package arrives in Australia, the customer is called and asked if they would like the courier to act as the customer’s import broker. The customer says yes, and the courier company provides a cost for any duties and taxes plus the brokerage fees, and then GST on the brokerage fees (because the brokerage is a taxable service to the customer). The customer then pays by credit card over the phone, and the package is processed and delivered. If the customer wants to pay COD (cash on delivery), some brokers will charge an insurance fee to cover the duties and taxes if they exceed a certain value.
Those brokerage fees quickly add up. Worse still, the shipping fees themselves are almost always higher than when shipping by post, even if you select priority airmail. I have seen books increase in cost by as much as 50% when imported by courier. That would definitely not make your customers happy.