GST Changes To Increase Aussie Online Shopping Bill
Recently it was announced that offshore businesses who supply goods and digital products to Australian consumers with an Australian turnover of $75,000+ will be required to withhold and remit GST to the ATO. This was already the case on purchases greater than $1,000 (as there was an exemption for supplies less than $1,000). However, from 1 July 2017 GST will apply to purchases below the $1,000 supply threshold as well.
For Australian consumers this means every purchase you make online from large organisations, whether it be from ASOS or from a large eBay seller situated in the U.S. or Asia, you’ll be paying an additional 10% of the purchase price . This also includes digital products such as online streaming services such as Netflix, music, apps, etc. The Australian Government insists consumers will only be covering the cost of GST.
The apparent intention of the Government is to “level the playing field” somewhat between local suppliers and overseas suppliers. If you’re running your own business in Australia with overseas competition, this may be a welcome change.
As an example, foreign businesses in highly price-competitive fields such as streaming online services (think Netflix or music streaming services) will no longer have a significant advantage in not attracting GST. Previously international services were able to offer more competitive pricing compared to domestic streaming services because they are not required to withhold and remit GST.
There are a lot of questions and issues that arise with the execution of this scheme. For instance, how will the Australian Government police compliance and payment from offshore suppliers? Will the cost of compliance outweigh the tax revenue? Together with potential changes to the rate, GST is becoming an important area to monitor.
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