Amazon has proposed a model where delivery service providers would collect GST on behalf of online retailers, but Australia Post has immediately rubbished the idea.
Online purchases worth less than $1,000 are not currently slugged with GST but that exemption will be removed from July next year. The Productivity Commission is now compiling a report on how the change can be implemented, which has attracted feedback from a variety of parties – including Amazon, Australia Post and the ATO.
Amazon has proposed a solution — which it calls the Modernised Transporter Model – that would see delivery service providers collecting the GST. The US retail giant argues such a model will be more effective than the government’s legislated method of online merchants directly collecting the tax.
“The [government’s model] will result in substantially less GST revenue for Australian states and territories relative to the MTM because of its unenforceability and low compliance,” Amazon stated in its submission.
“By contrast, the MTM will yield twice as much GST revenue in year 1 of implementation and $1.5 billion more over five years.”
Australia Post and the Conference of Asia-Pacific Express Carriers have both argued against Amazon’s proposal, stating that putting that administrative burden on delivery services would be “unfair”.
“The financial costs and business disruption to postal and freight express providers would… be unfair and out of proportion to the relative roles each party has in the international sales and importation process,” Australia Post stated in its submission to the Productivity Commission.
The postal service submitted that the cost of acting as tax collector would cancel out the revenues earned for delivering the goods, providing an estimate of $14.30 per package to recover the costs of setting up electronic systems and processes – far exceeding the $3 per item Amazon has proposed to compensate delivery companies.
The Productivity Commission is scheduled to hand its final report to the government by the end of the month.