Online shopping purchases under $1000 are one step closer to drawing GST

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The communique from yesterday’s gathering of Australian government leaders is out, and it appears there’s been agreement on trying to add GST to online shopping purchases for items costing under $1000.

The proposal, championed by federal assistant treasurer Josh Frydenberg, received “in principle” agreement in discussions between the prime minister and the heads of the state and territory governments yesterday.

The matter is being referred to the state and federal treasurers to discuss implementation.

Australians now spend around $17 billion on online shopping purchases each year. In the federal budget, the government announced a so-called “Netflix tax”, which would apply GST to content services supplied from overseas such as Netflix and iTunes.

The Frydenberg proposal, which follows the implementation of similar schemes overseas including the UK and Canada, would see GST extended to clothing and other products bought through online retail platforms based offshore.

Australian retailers have long argued they are disadvantaged by the effective 10% discount that offshore retailers can provide. Western Australia has been the main opponent of the proposal, because it has been arguing for changes to how the GST take is distributed between the states.

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