Over the past 6 months I have covered the ever-changing topic of tax here in Australia, to try and help better inform our community about how the changes will affect us. Numerous discussions have occurred between parliamentary and governing bodies, but last week on the 21st August 2015 it appeared that some solidarity has been provided. State and territory treasurers this week have agreed to apply GST to all offshore sales for products entering Australia.
The new law will come into affect from July 2017 and the tax will apply to all goods and services that are sold by vendors based overseas. Joe Hockey’s explanation in defence of this change was “this will ensure that there is a fair and equal treatment of all goods and services.” He continued to announce that there would be a $0 threshold, meaning this new tax will include every single product and service that enters Australia.
Hockey expanded further mentioning that he believes larger corporations such as Amazon would happily take part, but he could not guarantee that smaller companies would comply entirely. You can bet your bottom dollar that every single local retailer and major shopping centre is celebrating the fact that the GST loophole will now be closed (in 2 years time).
My previous blog post covered the issue of retailers pushing the government hard to close this gap in order to secure more of the Australian market and prevent the loss of business to overseas competitors. The Australian Retailers Association (ARA) have been the main driving force behind the push, so in a way you can thank them for potentially increasing your prices for overseas products.
This change follows the Council of the Australian Government’s alterations to the $1,000 Low Value Import Threshold last month (LVIT). In favour of this change, the NRA and the Shopping Centre Council of Australia (SCCA) said that the issue of the $1,000 LVIT, which exempts overseas retailers from having to pay GST (plus a variety of other taxes) had gone on for far too long.
Trevor Evans, the NRA CEO commented today on the topic, “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.”
He extrapolated further to explain why he believes this is such a big win for the NRA. “While the $1,000 threshold was introduced along with 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.”
His remarks further mentioned how he believes the government are now on the right track to protecting the Australian marketplace, especially with the introduction of the ‘Netflix Tax’, and that he and his organisation were very pleased about this victory. In the background we also heard a statement come from the Australian Retailers Association (ARA) who exclaimed that the change was “necessary and overdue.”
It’s worth pointing out that the reason these guys are so happy is because it now helps Australian retailers become more competitive within the world stage and will hopefully stimulate economic growth within Australia.
Personally, I would have liked to display a price table of how the cost of certain items would change, but the change does not come into effect until July 2017, so any costs quoted now would only be inaccurate. However as a rough guide, you could mentally add 10% to whatever you buy online as a rough guide. Ultimately, all your overseas purchases are going to increase in price and the daunting Australia Tax has now cast a wider net over us all. It’s a win for Australia as a country and improving economic growth is always something we should welcome to improve our country in the long term, but unfortunately that comes at a cost, a cost that will hit our pockets in the short term.