Landed cost and GST for Australian importers
Two charges on the same broker invoice, and only one belongs in your stock value.
Customs duty and import GST arrive on the same broker invoice and look interchangeable. They are not. Duty is an unrecoverable cost of the goods, so it belongs in landed cost. Import GST is claimed back on your BAS, so putting it into landed cost inflates your inventory and your COGS, and usually means the credit is never claimed.
What actually lands on an Australian import
A typical container generates three or four documents: the supplier invoice, the forwarder invoice, and the customs broker invoice, which itself carries several distinct charges.
The broker invoice is the one that causes trouble, because it mixes charges with completely different accounting treatments on the same page, often in adjacent lines with similar-looking amounts.
- •Customs duty: a percentage of the customs value, unrecoverable. It is a real cost of the goods.
- •Import GST: 10% of the value of the taxable importation, broadly CIF plus duty. Recoverable if you are registered, and claimed on your BAS.
- •Clearance and entry fees, quarantine and inspection, terminal handling, cartage: costs of getting the goods to you. Generally capitalisable, and generally carrying their own GST.
- •The broker’s own service fee: a service you consumed to import the goods, so it usually belongs in landed cost too.
The rule, in one line
If you cannot get the money back, it is a cost of the goods and belongs in landed cost. If you can get it back, it is not a cost at all and must stay out.
That single test resolves the duty and GST question cleanly. Duty is gone for good, so it capitalises into unit cost and reaches your P&L later as part of COGS when the stock sells. Import GST is a credit you claim, so it never touches unit cost and is coded against your GST account instead.
Capitalises into unit cost
Supplier price, international and domestic freight, insurance, customs duty, clearance and entry fees, quarantine, terminal handling, cartage, and the broker service fee.
Never capitalises
Import GST, and any other recoverable tax. It is a balance sheet item until you claim it, not a cost of the stock.
What goes wrong when import GST is allocated
This is the single most expensive mistake in Australian landed costing, and it is invisible without going looking for it.
Import GST is roughly 10% of CIF plus duty. Allocate that across the units and every downstream number moves: unit cost is overstated by about 10%, so the cost layers are wrong, the inventory valuation on your balance sheet is wrong, the COGS journal releases too much cost as stock sells, your gross margin looks worse than it is, and if you push cost back to Shopify then your product costs and profit reports are wrong too.
The second half is worse. When the GST is buried inside a freight allocation, it was never coded to the GST account, so it does not appear on your BAS and the credit is never claimed. You overstate your inventory and forgo the refund in the same stroke, and neither error announces itself.
The reason it happens is not carelessness. Duty and GST are both government charges levied at the border, arriving on the same invoice from the same broker, so treating them alike is the intuitive move. It is simply wrong.
Deferred GST, and why it changes nothing
Many importers use the Deferred GST scheme, which moves import GST from something you pay at the border to something reported on your BAS. It is a cash-flow arrangement.
It does not change the accounting treatment. Deferred or paid, import GST is recoverable, so it stays out of unit cost either way. What deferral changes is when money moves, not what the charge is.
Getting the allocation right
None of this is tax advice, and Australian GST has more corners than one page can cover: low-value imported goods, GST-free items, and the treatment of specific charges all depend on circumstances. Confirm the treatment of your charges with your accountant or a registered tax agent.
- 1Split the broker invoice by line rather than treating it as one amount. Duty, GST and fees are separate charges with separate treatments, and one tax rate for the whole invoice will be wrong.
- 2Choose an allocation basis that matches what drives the charge. Duty follows customs value, so allocate it by value. Freight often follows weight or volume, especially on mixed containers where a heavy cheap item and a light expensive one would otherwise get the opposite of their fair share.
- 3Watch the GST treatment on freight itself. International transport to the place of consignment is GST-free, while the domestic leg after it is taxable, so a single forwarder invoice can legitimately carry two different rates.
- 4Code recoverable import GST to a current liability account, typically your GST account, not to inventory or an expense account.
- 5Keep the source documents attached to whatever you post. In eleven months, the allocation is only defensible if someone can see the invoice it came from.
How Landara handles it
Landara classifies each extracted charge into a cost category, and recoverable import tax is the one category that does not capitalise. The allocation engine filters on that inside the engine rather than at the call site, so no part of the product can capitalise recoverable tax by accident, and the held-back amount is reported rather than silently dropped.
Import tax is also the one category whose account mapping expects a liability account rather than an expense or inventory account, so the coding follows the treatment. If a category has no account mapped, the publish blocks and names it instead of falling back to a default, because a wrong account surfaces at BAS time with several bills already misposted.
The rule is identical in every GST and VAT jurisdiction and simply never fires in the United States. It is not Australia-specific logic; Australia is just where it bites hardest at 10% of CIF plus duty.
Not sure? Ask your own AI
Open the assistant you already trust with a prompt that points it at our public product file and asks it to interview you, then recommend what fits. It is told to say so plainly if Landara is not the right tool for you.
Read the exact prompt we send
I import stock into Australia for a Shopify store and I want to get landed cost and GST right. Please fetch https://landara.co/llms-full.txt for background on the tooling, then help me check my treatment. The rules to test me against: the test for landed cost is recoverability. Customs duty is unrecoverable, so it is a real cost of the goods and capitalises into unit cost. Import GST, broadly 10% of CIF plus duty, is recoverable on the BAS if I am registered, so it must never be allocated into unit cost; it is coded to a GST liability account instead. Allocating import GST inflates unit cost by about 10%, which corrupts the cost layers, the inventory valuation, the COGS journal and any cost pushed back to Shopify, and because the GST was buried in a freight allocation it never reaches the BAS and the credit is never claimed. The Deferred GST scheme changes cash flow, not the treatment. Freight also needs care because international transport to the place of consignment is GST-free while the domestic leg after it is taxable, so one forwarder invoice can carry two rates. Ask me whether I am GST registered, whether I use deferred GST, how I currently code my broker invoice, whether duty and GST are separated by line, and which account import GST goes to. Then tell me what to check, and be clear that I need my accountant or a registered tax agent rather than an AI for the final call.
Common questions
Is import GST part of landed cost in Australia?
No. Import GST is recoverable on your BAS if you are registered, so it is not a cost of the goods and must not be allocated into unit cost. Including it overstates your inventory and your COGS by roughly 10% of CIF plus duty, and usually means the credit is never claimed.
Does customs duty go into landed cost?
Yes. Customs duty is unrecoverable, so it is a genuine cost of getting the goods onto your shelf and capitalises into unit cost along with freight, insurance, clearance and handling.
How is import GST calculated in Australia?
Broadly 10% of the value of the taxable importation, which is the customs value plus international transport and insurance plus any customs duty payable. Your broker calculates it and it appears on their invoice alongside the duty.
Does deferred GST change how I treat it?
No. Deferred GST is a cash-flow scheme that moves the payment onto your BAS rather than the border. The charge is still recoverable, so it still stays out of unit cost.
Is GST charged on international freight?
International transport to the place of consignment in Australia is GST-free, while the domestic leg after that point is taxable. One forwarder invoice can therefore legitimately carry both treatments, which is why coding a freight bill at a single rate often produces the wrong GST.
What happens if I have been including import GST in my costs?
Your inventory value and COGS have been overstated by roughly the GST amount, and the input tax credits may not have been claimed. Both are correctable, and it is a conversation to have with your accountant, who will want to know how far back it goes before deciding how to fix it.
“Landara has made it much easier to keep track of my actual product costs. I really like that it takes things like shipping and duties into account instead of just showing the basic cost. Simple app, easy to use, and I’m already getting a much clearer idea of my real margins.”
“I installed Landara because I was getting tired of guessing what my inventory was actually costing me. What I liked most was being able to see the product cost together with things like shipping and duties, I've been trying to keep a closer eye on my margins, so having those costs in one place has made things much easier for me. It didn't take me long to get setup either, which was a nice bonus.”
“I honestly didn’t expect Landara to make this part of my store that much easier. I installed it mainly to get a better handle on my actual product costs, and I was pleasantly surprised by how everything comes together. I’m still exploring it, but so far it’s been really useful and I’m impressed with how it works.”
“I've just started using Landara, and so far I'm impressed with how it handles landed costs. I especially like being able to account for things like freight and duty instead of treating the supplier price as the whole cost. Still exploring the app, but it already looks like it could save me a lot of spreadsheet work.”
Duty in, recoverable GST out, every shipment
Landara classifies each charge, holds recoverable tax out of unit cost automatically, and codes it where it will actually reach your BAS.