GST on imported goods in Australia (the VoTI explained)

What Australian GST on imports actually taxes

If you import goods into Australia, the cost that surprises most first-time importers is not the customs duty — it is the GST. Australia charges 10% GST on almost everything that clears the border above the entry threshold, and it is calculated on a base that is broader than the price you paid the supplier. Get the base wrong and your landed-cost estimate is off by exactly the part that hurts: the tax that compounds on top of everything else.

The base GST is charged on is called the Value of the Taxable Importation (VoTI). It is built up like this:

VoTI = customs value + customs duty + international transport & insurance

GST = 10% of the VoTI

(Strictly, the VoTI also adds Wine Equalisation Tax where it applies — relevant only if you are importing wine.)

Read that formula closely, because it contains the single most misunderstood mechanic in Australian importing.

GST adds the freight and insurance back in

Australian customs duty is assessed on a transaction-value / FOB basis — the customs value excludes the international freight and insurance that got the goods from the foreign port to Australia. So for duty purposes, shipping is stripped out. (If that distinction is new to you, see CIF vs FOB.)

GST does not follow that logic. The VoTI adds the international transport and insurance back in, and it sits on top of the duty as well. So the freight and insurance that were excluded from the duty base reappear in the GST base — and the duty itself becomes part of what GST is charged on. GST genuinely compounds.

A worked example makes this concrete. Say you import goods with a customs value of AUD 5,000 (FOB), pay AUD 600 ocean freight and AUD 50 insurance, and the tariff line carries a duty rate of 5% (an example rate only — duty varies by HS classification, see below):

Customs value: 5,000
Duty: 5% x 5,000 = 250 (freight and insurance excluded here)
VoTI: 5,000 + 250 + 600 + 50 = 5,900 (freight and insurance back in, plus the duty)
GST: 10% x 5,900 = 590

Notice what happened to that 650 of freight and insurance. It was invisible to duty, but it is fully taxed by GST — and the 250 of duty is taxed too. That is why GST on a shipment is almost always the largest single border charge, and why "10% of the invoice" undershoots the real number. You can run your own figures through the Australia import duty calculator, which applies the VoTI correctly rather than taxing the goods value alone.

The AUD 1,000 threshold — and what happens below it

GST and duty are only assessed at the border when the consignment's customs value is over AUD 1,000. Below that, the Australian Border Force does not collect duty or GST on the import itself (alcohol and tobacco are the standing exceptions — they are taxed at any value).

This is where people wrongly conclude that low-value imports are tax-free. They are not. Since 1 July 2018, the Low Value Imported Goods (LVIG) rules require overseas sellers, online marketplaces and re-deliverers to register for Australian GST and collect the 10% at checkout on consignments of AUD 1,000 or less. The GST has not been waived — the collection point has simply moved from the border to the point of sale. If you have bought from a large overseas retailer and noticed GST added at the cart, that is LVIG in action.

So the threshold is a collection mechanism, not an exemption. Above AUD 1,000, GST (and any duty) is assessed on formal import. At or below AUD 1,000, the same 10% is generally charged upfront by a registered seller. One way or another, GST is in the price.

It is not 10% on everything: GST-free categories

A genuine exemption does exist, but it tracks the categories that are GST-free domestically, not a value threshold. The main ones an importer might encounter are:

Basic food (the staple-food categories that are GST-free when sold in Australia)
Certain medical aids and appliances
Precious metals (investment-grade gold, silver and platinum meeting the fineness rules)

If goods fall into a GST-free class, no import GST applies regardless of value. These categories are narrow and specifically defined — most consumer and commercial goods do not qualify — so treat GST-free status as the exception to confirm against the goods, not the default to assume.

How GST differs from duty

It is worth being precise about why these two charges behave so differently, because importers routinely conflate them:

Rate and base. Customs duty varies by product — it is set by the goods' HS classification and can be anywhere from free to double digits per tariff line. GST is a flat 10%, but on a wider base (the VoTI), which is why it usually dwarfs the duty.
What they tax. Duty taxes the (roughly FOB) customs value. GST taxes the customs value plus duty plus international freight and insurance — it is the compounding layer.
Recoverability — the big one. Customs duty is a sunk cost: it is a cost of the goods and you do not get it back. Import GST is different — a GST-registered business can generally claim the import GST back as an input tax credit on its Business Activity Statement, the same way it claims GST on domestic purchases. So for a registered importer, GST is largely a cash-flow timing cost, while duty is a permanent cost. For an unregistered buyer or a private import, the GST sticks.

That recoverability point should shape how you think about a quote. If you are GST-registered and importing for your business, the duty is the figure that erodes your margin; the GST you will typically recover. If you are importing privately, both land on you in full.

If you want the full picture of how duty, GST, freight and fees stack into a single delivered figure, walk through how to calculate landed cost — and for the conceptual difference between the charges, import duty vs VAT/GST vs tariffs covers why a tax that compounds behaves so differently from a flat duty. As always with thresholds and exemptions, verify the current position against the Australian Border Force and ATO before you commit to a number — the rules are stable, but they are not frozen.