Online Shopping GST Delayed For 12 Months

Late on Monday, the Federal Government voted in favour of delaying the introduction of the proposed Treasury Laws Amendment (GST Low Value Goods) Bill 2017 until July 1, 2018.

The new tax, which was due to be implemented next month, would have forced Australian consumers to pay a 10% GST on all goods purchased from overseas merchants, under the value of $1,000.

While the delay is a win for international online giants, like eBay, Amazon and other popular overseas e-commerce companies, it has angered local retailers, who believe they are at a disadvantage.

Gerry Harvey, executive chairman of Harvey Norman
Gerry Harvey, executive chairman of Harvey Norman

Harvey Norman’s Gerry Harvey last night argued the change was the result of clever lobbying by overseas online retailers, who have talked Australian politicians into delaying the change.

“They’ve been hijacked,” he told the ABC.

“The unfortunate thing is that (politicians are) susceptible to this kind of activity, which doesn’t say a lot for their mental capacity,” remarked Harvey.

“If a product is $100 or $1000 in a shop in Australia you put 10% GST on it. If the product is the same price and is imported from overseas you don’t put any GST on it. So it’s just a subsidy straight away to an offshore retailer. How anyone can say that’s a good idea is beyond me.”

“If they pay no GST why should anyone in Australia pay GST?”

Last year the Australian government agreed that implementing the tax would help to level the playing field for Australian online retailers’ in the face of growing international competition, and the move would generate an extra $300 million revenue over four years.

However, there has been much talk and speculation about who would fit the bill for the tax, and how it would be collected, which the government still has not ironed out as yet.

The one-year delay to the application of GST to online overseas purchases under $1000, was not ideal for struggling Australian retailers, but would it will allow the Government more time to iron out the practical challenges involved in its implementation, according to The National Retail Association (NRA).

NRA CEO Dominique Lamb says that applying GST to overseas online purchases under $1,000 to bring them into line with domestic purchases from all channels, would remove the unfair disadvantage to Australian retailers.

“While a 2017 implementation date would have gone a long way to helping Australian retailers level the playing field with their overseas counterparts, the logistics surrounding its implementation are challenging, and need considerable time to iron out.”

Lamb says that while the delay is disappointing, it’s important this legislation was not rolled out prematurely.

“There is a myriad of issues yet to be worked out surrounding how it will actually work in practice, but good policy and good governance takes considerable time and meticulous planning – so on the flipside, the year’s delay should give all parties the time needed to work through the issues, to find the best way to implement what we believe will be a crucial boost to the Australian retail sector,” says Lamb.

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5 thoughts on “Online Shopping GST Delayed For 12 Months

  1. What a kick in the guts for Australian Retaiers who have been waiting for July to roll around. What has the government done for the last 4+ years. Why does NRA CEO Dominique Lamb not unify retailers to NOT pay GST until this issue is sorted

    Reply
    • Anonymous
    • 22nd June

    The problem no one has any idea of how to collect the revenue effectively. Are we really going to go collecting GST on a $1 order from AliExpress? Are overseas retailers really going to charge and forward GST? Most overseas retailers are not going to even know about our GST requirement. If so can customs cope with the collection, and be able to store the orders until the GST portion payment is made? What about all the Aussies that won’t bother paying, who is going to pay for the shipping back to the retailer or will they just end up in the landfill? What about breakdowns in communication, the customer blames the retailer when they never got a request for payment from customs and the order get returned? If the payment of GST is made after the customer gets their order, and is not being collected by the overseas retailer, how are they going to collect it? The scale would be enormous to start collections on every order when no GST has been paid. How can the government afford to collect GST on a $1 AliExpress order?

    Reply
    • Tash
    • 22nd June

    It’s nonsense to say that abolishing the $1000 threshold is good for all small business. I often order parts, consumables etcs from overseas that just aren’t available from local suppliers for a small business. If I get charged GST for that, it increases the business expenses, which have to be handed onto the consumer.

    The only business it helps is large retailing firms like Harvey Norman that imports things in bulk and where it isn’t feasible to buy in sub-$1000 lots for your small brick and mortar store. The idea is that prices in Australia are kept artificially inflated and consumers forced to pay Australia tax for everything by protecting large retailers like Harvey Norman from smaller mum-and-dad store competitors.

    The real crunch for Gerry Norman will come when Amazon opens up for good in AU. I will find it hard to shed a tear should we see Harvey Norman go bankrupt.

    Reply
    • Michael
    • 23rd June

    I just paid DHL $346.20 for an $1100 order (including shipping) from overseas for collection of GST. This included 10% GST and a raft of other fees, collection costs, etc. Most of these are fixed costs so the fees through DHL would make a $50 or $100 not worth buying at all.

    Even with this exorbitant additional cost, the price of the items I bought were still 60% less than the price Australian retailers are selling for locally.

    Consumers aren’t buying from overseas because they are saving 10% in GST, they are buying because Australian retailers have been gouging consumers for way too long. Amazon will show our retailers just how to treat a customer and the government won’t be able to help bail them out at that point.

    The more the government steps in to help Australian retailers now, the more they will end up like automotive manufacturing in Australia.

    Reply
    • Bubbles
    • 26th June

    If this goes ahead many overseas retailers will block Australian purchasers because the GST is just too much trouble & expense for them. If this happens Australia goes back to being a backwater in trade. This is regressive not progressive. It will cost more than they ever make.

    For the likes of Gerry Harvey whinging – he has a lousy business model and is way behind the times in online retailing. He stuck his head in the sand and said online sales were just fad – more fool him – and now he has the nerve to whine about his lot.

    Even if there was this tax it wouldn’t make any difference to retailers here as most people shop on line due to the tyranny of distance and the lack of supply in this county.

    Reply

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