Downloaded music, movies, and books will be subject to GST under a deal reached between the Federal and State treasurers.
Federal Treasurer, Joe Hockey, said it was an “integrity” measure and not a broadening of the GST – which the coalition had promised it would not do.
Under the plan, a company providing an “intangible service” into Australia – wherever they are located – would charge GST on those services.
“The states agreed in principle that we should move in that regard and we have offered to work as quickly as possible with them to introduce legislation to address that,” Hockey said on Thursday after meeting with other treasurers.
It could be followed by a further change involving applying the GST to goods imported online which are valued at less than $1000.
Some online streaming services have already responded to the plan.
Netflix US says it will happily add the GST to the cost of its service once the federal government makes it legal.
Labor has also indicated it will look at the proposal, while criticising the Government for not targeting the “big end of town”.
“I’ve some sympathy for people who say that these internet-provided media products don’t pay the GST, but I think we need to go back one step,” opposition leader, Bill Shorten, said.
The Australian Retailers Association (ARA) is pleased Hockey and State Treasurers have recognised the unfairness of online digital content not being charged GST, unlike traditional forms of media.
Hockey’s Netflix tax is said to be part of a clutch of tax integrity measures contained in next month’s Federal Budget and would see popular overseas media streaming services, such as Netflix and Apple, charged GST on their downloads.
ARA executive director, Russell Zimmerman, said it is now time to apply GST to all goods purchased from overseas, with the Netflix initiative proving just how easy collecting such tax can be.
“It should be just as easy to collect GST from Amazon as it is to collect GST from Netflix and Apple.
“The ARA has been leading the campaign to fix the under $1000 GST loophole for goods bought from overseas and is frustrated by vested interests slowing reform.
“We know around 20 companies bring in about 80 per cent of all overseas purchased goods.
“Australian retailers are also not being given a level playing field, and this is costing many local jobs.
“The ARA has been in discussions with the government on how to speed up reform of collection,” Zimmerman said.
Hockey said the move had the potential to generate billions of dollars in revenue.
It could be followed by a further change involving applying the GST to goods imported online which are valued at less than $1000.
AAP
