Australia’s top online and store retailers have welcomed an announcement by the Treasurer that the Federal Budget will include draft tax legislation to address the integrity of the GST on intangibles purchased online from offshore.

Overseas digital suppliers of movie downloads, games and e-books will have to charge GST under draft laws to be announced in the federal budget.

Treasurer, Joe Hockey, said the laws would level the playing field and raise $350 million over the next four years – all of which would go to the states.

“It is plainly unfair that a supplier of digital products into Australia is not charging the GST whilst someone locally has to charge the GST,” Hockey said.

Australian National Retailers Association (ANRA) CEO, Anna McPhee, said that it was in April 2013 that ANRA first proposed a model of tax collection at the point of transaction rather than the border.

She said ANRA is delighted the Government is moving to address the important tax integrity issue with such a solution.

“Retailers are encouraged by the Federal Government’s first steps, but intangibles are just one aspect and goods also need to be acted on to address tax integrity fully,” said McPhee.

“We must strengthen the integrity of Australia’s tax system and ensure similar types of goods and services consumed domestically are taxed in the same way, no matter how that purchase occurs.

“GST on music, books, video games or fashion is not a new tax and without action, what is currently $1 billion in foregone revenue from goods and services will continue to rise as global providers of products and services focus more on marketing in Australia.

“The Government’s action finally recognises how the digital economy has changed Australia since the introduction of the GST in 2000 and further highlights the importance of a well functioning tax system,” she said.