Use Tax in Australia 2025: What You Need to Know

The digital retail revolution has made it easier than ever for Australians to shop globally, but it has also brought new tax challenges. Among them is the use tax, a concept that’s becoming increasingly relevant as the ATO sharpens its focus on cross-border transactions. So, what exactly is use tax, and how might it affect your finances in 2025?

What Is Use Tax and Why Is It Relevant in 2025?

Use tax is a levy applied to goods purchased from overseas or interstate that haven’t had Australian GST (Goods and Services Tax) applied at the point of sale. It’s designed to level the playing field between local retailers and foreign sellers, ensuring all goods consumed in Australia contribute to the tax base.

With the surge in online shopping, especially from overseas platforms, the Australian government has introduced and updated measures to capture GST on low-value imported goods. Since 2018, overseas businesses selling goods under $1,000 to Australian consumers are required to collect GST at checkout. However, not all sellers comply, and some purchases may slip through the cracks—this is where use tax comes into play.

• Applies to goods bought from overseas or interstate without GST
• Relevant for individuals and businesses
• Helps close the tax gap caused by online and cross-border shopping

How Is Use Tax Enforced and Who Needs to Pay?

The ATO has steadily increased its digital capabilities, using data-matching and real-time reporting to identify untaxed purchases. In 2025, the enforcement of use tax is more robust than ever, targeting both consumers and small businesses who import goods without paying GST at the point of sale.

Key scenarios where you might owe use tax in 2025:

• Purchasing goods online from overseas retailers who don’t collect GST
• Bringing items into Australia that exceed personal import thresholds
• Business purchases from international suppliers not registered for Australian GST

If GST hasn’t been paid, you’re technically required to declare the purchase and pay the use tax equivalent (usually 10% of the value) either at the border or via your annual tax return. For businesses, failing to comply can mean penalties and ATO scrutiny, especially as real-time customs data sharing ramps up in 2025.

Real-World Examples and Policy Updates in 2025

Let’s look at a typical scenario: You order $800 worth of electronics from a US-based website that doesn’t collect GST. At customs, the goods may be flagged, and you’ll be required to pay 10% use tax before the package is released. If the purchase slips through and isn’t flagged, it’s your responsibility to declare the transaction in your annual tax return.

For businesses, suppose you import $5,000 in inventory from a Chinese supplier who isn’t GST-registered. The ATO’s 2025 compliance initiatives now cross-check customs import data with business BAS (Business Activity Statement) lodgements. If you haven’t reported and paid use tax, expect a prompt from the ATO.

Notable 2025 updates:

• Expanded data-matching with major courier and freight companies
• Higher penalties for repeated non-compliance
• Streamlined online portals for self-reporting use tax

How to Stay Compliant and Avoid Surprises

Staying compliant in 2025 is about awareness and proactive reporting. Here’s what you can do:

• Check if GST is included in the price when shopping online, especially from overseas retailers
• Keep records of all cross-border purchases, including receipts and shipping documents
• Declare any untaxed imports when lodging your tax return or at the border
• For businesses, integrate import data into your BAS reporting and consult with your bookkeeper regularly

Being proactive not only avoids penalties but also ensures you’re not caught off-guard by unexpected tax bills or delays in receiving your purchases.