GST on online shopping

It comes as state treasurers prepare to meet in Canberra today, where they are expected to sign off on lowering the low-value import threshold (LVIT), agreed to in principle by state premiers at last month’s COAG meeting.

Debate will centre around the proposed level of the new threshold. Treasurer Joe Hockey flagged last month that the online GST threshold “could be zero”. Assistant Treasurer Josh Frydenberg said “it was different in different parts of the world”. “We are making headway,” he told news.com.au.
“The breakthrough was at the COAG meeting.”

Mr Hockey told ABC radio he held preliminary discussions on Thursday night and there “appears to be a consensus” to create an equal playing field for Australian businesses.

If they agree, the Federal Government would then need to introduce legislation to push through the change. The retail industry has been pushing for the threshold to be lowered to “level the playing field”, arguing the tax-free purchases unfairly penalise Australian businesses.

Consumer group Choice warned on Thursday that changes to the threshold could lead to consumers paying a ‘parcel pick-up’ tax when buying goods from small online retailers not registered with the Australian Taxation Office to collect GST.

It argues at the same time, the US is heading in the opposite direction, with a bill introduced in the Senate to increase its LVIT from $US200 to $US800, bringing it roughly in line with Australia’s current level.

The government has been arguing that large online retailers such as Amazon and Book Depository already have the ability to add GST to purchases, but Choice argues consumers could be slugged with unexpected costs.

“If any change mirrors overseas measures, consumers would have to go to their local parcel pick-up, pay the GST and also pay a ‘parcel pick-up’ tax before they can get what they ordered,” said Choice’s director of campaigns and communications, Matt Levey.

“Under the same approach as the UK system, a $20 book purchased online from an unregistered business could end up costing an extra $2 in GST, plus $16.97 for the parcel pick-up tax.
“It would also throw online retail into chaos, as uncollected parcels ordered from unregistered businesses are left to clog up post offices across the country.

“Paying almost $17 in fees to collect $2 in tax would be crazy economic policy. It’s got nothing to do with raising revenue or removing a 10 per cent price difference — it’s about punishing consumers to protect local retailers from global competition.”