Australian Border Force Targets Compliance Issues in Delivered Duty Paid (DDP) Shipments
The Australian Border Force (ABF) is investigating suppliers who undervalue consignments and split single orders into multiple shipments, each valued under $1,000, in Delivered Duty Paid (DDP) transactions to evade import duties, taxes and fees.
By Ro Elvinia
Under DDP terms, overseas or non-resident business suppliers are responsible for customs clearance and paying all applicable duties and taxes. Australian Taxation Office (ATO) Law Companion Ruling LCR 2016/1, however, allows non-resident businesses to be exempt from GST registration if their sales of low-value imported goods (LVIG) of $1,000 or less are exclusively to GST-registered Australian businesses, which can claim input tax credits.
The DDP arrangement can expose consignees or Australian companies, including non-resident businesses with a permanent establishment (PE) in Australia involved in shipment transactions, to significant risks, such as customs duty recovery, embedded customs duties and GST compliance issues.
A consignee may be held liable for unpaid customs duties if shipments are undervalued or split to avoid duties. The ABF has the authority to recover underpaid duties for up to four years, with penalties of up to $19,800 per import declaration or 100% of the short-paid duty, whichever is greater.
Additionally, consignees may be unable to leverage free trade agreements, tariff concessions or duty exemptions without visibility over duty payments, leading to unnecessary costs.
In terms of GST compliance, if a non-resident business supplier does not properly register for GST or fails to appoint a resident agent, it may attempt to use the consignee’s Australian Business Number (ABN) on customs declarations. Without an agency agreement, this could result in the denial of the consignee’s input tax credits.
Exceptions to the general GST registration exclusion for non-resident businesses selling LVIG may apply. The ATO requires non-resident businesses selling LVIG to Australian consumers to register for GST if their GST turnover from such sales meets or exceeds $75,000 within 12 months. GST registration also applies when goods are sold to individuals or entities not registered for GST in Australia. However, if the buyer is GST-registered, the sale is not classified as a consumer sale, and different tax rules apply.
Need expert guidance on GST and tax compliance?
For non-resident business suppliers and non-resident businesses with a permanent establishment in Australia, navigating GST and tax compliance can be complex. ABN Australia can help reduce your risk exposure by undertaking a formal review of your products and customer demographics or providing expert advice on the GST implications of your transactions – especially when allowing non-residents to use your company’s ABN.
Do not wait until compliance issues arise. Contact ABN Australia today to ensure your business is structured correctly and protected from unnecessary tax risks.
Published: 08th Aug 2025 | Last updated: 08th Aug 2025
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