GST on importation

We import goods and one of the things we get charged is GST on imports which is an amount associated with the value of the goods imported.

I set up a tax code with a rate of 100% and then created a purchase invoice with that in it and it does not appear to of worked correctly. It also does not show in the Bas work sheet.

It also does not look right in the invoice, it appears to add it in twice then removes it so the total is correct if that helps you.

I suspect I have done something wrong and hope you can help me.

First of all delete tax code with 100% tax rate you have created.

I assume that your overseas suppliers don’t charge you GST (obviously) but you end up paying GST to customs from who you will receive separate tax invoice.

So this is how it works:

When you record purchase invoice from overseas supplier, record it as you would record any other expense. Use tax code “GST FREE” because supplier is not charging you GST.

So far all good.

Then GST invoice comes from customs. Let’s say the original purchase was $10,000 (already recorded) and GST invoice comes for $1,000.

You need to split this $1,000 in following way:

-$10,000 with tax code: GST FREE
 $11,000 with tax code: GST 10%

What this split does is that you are reversing the original GST-free purchase (-$10,000) and recording new purchase with GST 10% code ($11,000).

Here are some tips I’ve developed to enter purchase invoices for bills from customs broker/international freight forwarders. This applied to goods where an import duty is payable.

  1. enter a new purchase invoice and tick “amount are tax inclusive”
  2. add the GST free customs value of goods, transport and insurance and import duty and enter the sum as a negative : GST free. (duty is a percentage of the customs value of the goods and varies depending on what you are importing).
  3. on the next line add 1.1 times the above as a positive : GST 10%. The difference between 1 and 2 is the GST on imported goods, payable immediately if you want your goods off the dock. Yep, you pay GST on the duty.
  4. on the next line add the customs duty : GST free. (GST already paid above)
  5. on the next line add the customs user fee : GST free.
  6. on the next line add overseas air/sea freight : GST free.
  7. on the next line add port charges, shipping and quarantine attendance, profession fees and ICS communications fess : GST 10%


I’m a bit worried about this now Lubos. The reversing methods works fine for the invoice but the GST negative makes its way as a GST free credit on the tax audit reports, and into G14 as a negative on the GST calculation worksheet for BAS. Any ideas?

Well, you have described how you are recording purchase invoice received from customs and your approach is correct.

However, how did you record original purchase invoice from supplier? Did you use GST Free tax code as well?

Yes the purchase invoice for the goods were recorded as GST Free. Whether this in entered with or without GST doesn’t seem to affect the problem with the G14 negative in the GST calculation worksheet.

Wait. Problem solved. I had no tax instead of GST Free. Thanks for your help.

I am a bit confused I have done the purchase invoice as above(first one I have done) I used the Australian GST Free as there is none for NZ. Total 850.00
Now I have the freight invoice who handles customs as well it has
Customs GST 179.70 which has Paid next to it
Handling charges Zero Rated 137.44
Then all their other expenses which are at our 15% GST
There is no total of 850.00 on it.

Hi @ Lubos,

I know this is another old thread, but havent seen anything mentioned on similar threads.

Given the in-built tax code for AUS, GST on Imports, could the reversing of charges as mentioned be circumvented by allocating the $1,000 with the code GST on Imports?

Ive noticed it adds it to the BAS Worksheet?

This is old topic which describes old method of dealing with GST on import.

Since then, I’ve added GST on imports tax code which means when you are charged GST by customs, you use this tax code on the GST amount charged. No need to reverse original expense as previously mentioned.

Have i missed a thread that describes this new new way?

Will the GST on Import calculate on the BAS?
Also which account do you post it to?

Screenshot of the new way: Does this look correct?

Yes, it’s correct. The only adjustment I would make is on the first line select an expense (or asset) account for which GST was paid for. Nothing will change as far as P&L goes because $282.37 will go straight into GST account but selecting correct account will make sure BAS will be able to identify this expense correctly as far as capital / non-capital distinction goes.

Fantastic, this is exactly what I was looking for too!

Thanks for the confirmation.
I have been unsure of all the GST importing functionality.