GST to apply to all offshore sales

tax, GSTState and territory treasurers have agreed to apply the GST to offshore sales into the Australian market.

From July 2017, the GST will apply to all products and services sold by vendors overseas into Australia.

“This will ensure that there is a fair and equal treatment of all goods and services,” treasurer, Joe Hockey, told reporters in Canberra on Friday.

There will be a “zero threshold”, meaning it will apply to all goods no matter what their price.

Hockey said he was confident big players such as Amazon would take part, but could not guarantee smaller companies would comply.

Retailers and major shopping centre owners have welcomed decision to close the GST loophole.

This decision follows the in-principle agreement at last month’s Council of Australian Governments’ meeting to reduce the current $1000 Low Value Import Threshold (LVIT).

The Australian Retailers Association (ARA)  welcomed the decision, calling it “necessary and overdue”.

The ARA was the first to raise the issue of the LVIT and its $1000 limit and advocate for its removal in 2010.

“The ARA is incredibly pleased to see that the loophole allowing international businesses an advantage over Australian retailers will be closed,” said Russell Zimmerman, executive director of the ARA.

“The LVIT has caused Australian retailers huge concern, and its abolition is long overdue. The removal of this archaic law is necessary for the growth and sustainability of all Australian retailers.

“While the ARA would prefer to see an earlier introduction date than July 1, 2017, we’re pleased that the threshold has been entirely scrapped, rather than merely reduced,” Zimmerman said.

“Australian retailers will now be able to play in the global economy on a level field.”

The National Retail Association (NRA) and the Shopping Centre Council of Australia (SCCA) said the issue of the $1000 LVIT, which exempts overseas retailers from paying GST and a range of other taxes and charges, had dragged on for far too long.

“This is a fight the NRA began five years ago and has invested considerable resources into research and advocacy over that time. After all of this work, it is pleasing to see a win for the retail sector,” said NRA CEO, Trevor Evans.

“While the $1000 threshold was introduced with the GST in 2000, the advent of online shopping has seen overseas online retail giants gain a leg-up in our system, while placing an unfair impediment on Australian retailers,” he said.

“Coupled with the proposed action on the ‘Netflix tax’, it is pleasing to see the government is now on the right track to restoring integrity to the GST.”

SCCA executive director, Angus Nardi, said the decision was all about ensuring a level playing field in the retail sector.

“Closing the LVT loophole is about restoring integrity and fairness to the tax system,” Nardi said.

“In September last year, it looked like action on the LVT had stalled, with Treasurer Hockey suggesting a preferred model could not be agreed between the states and territories.

“It was therefore pleasing when Assistant Treasurer Frydenberg re-ignited the debate over Christmas 2014, highlighting how unfair the LVT was and confirming it would be re-examined.”

Hockey said the treasurers had failed to agree on taking the GST off feminine hygiene products.

He said further modelling on a range of possible tax reforms had been commissioned and the treasurers would meet again in September.

“Overall there was a clear message from the treasurers that… whatever we do must stimulate economic growth in Australia,” he said.

Comments

7 comments

  1. Daisy Duke posted on August 21, 2015

    Asking overseas companies to collect and remit GST might work for some of the larger companies but I can't imagine others complying at all. And what if they refuse? It will only take one of the larger sellers to say no for the others to recant or likewise refuse. As usual it is a half-arsed solution set to be implemented in a ridiculously long timeframe designed so it has an excellent chance of not being able to be implemented.

  2. John posted on August 24, 2015

    In few years we will see how nonsensical are the statements like those: "decision was all about ensuring a level playing field in the retail sector" "necessary for the growth and sustainability of all Australian retailers" It is all more complex than just GST.

  3. Stuart Bennie posted on August 24, 2015

    Nonsensical? John - you are 100% on the money. That Retailers Associations support this illustrates to me that they simply pander to the passing parade without much thought of the cost. Of course it is more complex than GST.

  4. Peter posted on August 24, 2015

    I agree its a loophole that they are trying to close but as a retailer its not really going to help businesses in Australia unless your dealing with the major players like Amazon. All other companies will get through, also overseas companies are more than willing to readjust invoices to reflect a lower value of goods as well. It really cant be stopped and lets face it the world market has a lot more choice than here in Australia which is another major reason why people shop overseas. As John said the issue is quite complicated and not easily fixed.

  5. Michael Baker posted on August 24, 2015

    Probably not implementable, but worse, will make Australian consumers ticked off even more than they already are with their home-grown retailers. This is a total non-solution to retailer competitive challenges. Will not arrest their slide at all, although it probably does try to reverse an inequity.

  6. Lee-anne Knight posted on August 24, 2015

    Australian retailers are not dealing with the core issue - that consumers buy from overseas providers because they can get a much better deal than locally. I appreciate that there are costs that need to be covered, but when you can purchase the same item at substantially less overseas (and not just from online providers) people will either buy less or not buy at all. Today's consumer is a lot more savvy and a lot less willing to put up with poor service and high costs.

  7. Ben posted on August 25, 2015

    I cant see smaller overseas companies complying with this. What happened to Duty @ 5% ????? As a business if i import goods to the value of $100 then the following calculation is done: Value of goods = $100 Duty @ 5% = $5 Total = $105 GST @10% = $10.50 Total = $115.50 As you can see you need to add Duty first then GST on the total inc Duty which adds 15.5% So the level playing field is not so level as a business will need to pay an additional 5.5% than a consumer. Then i need to pay the $48.50 customs processing fee Total = $164.00 How is this even close to a level playing field.

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