The Australian Government Has Given Its Clearest Indication That It Might Tax Overseas Online Shopping

An Amazon Warehouse – Getty / Matt Cardy

If you buy things like apps and music from Google Play or iTunes regularly, you’ll have noticed prices have been increasing in recent months, thanks to the falling value of the Australian dollar on currency markets.

Buying from overseas online stores has also become more expensive, as while prices may not have increased, it costs more Aussie dollars to buy the same items as before.

This is good for domestic online retailers, because their products compete better with overseas. But they’re still at a key disadvantage in that sales by Australian websites to Australian stores attract the GST.

Now the federal government has given its clearest indication yet that it is open to introducing broad-based taxes on purchases from overseas websites, with new assistant treasurer Josh Frydenberg saying he wants to see a “level playing field” as online shopping continues to grow.

Australians are spending about $16 billion a year on online purchases, with an estimated $4 billion of that going to overseas sites. Purchases under $1000 – which would account for the vast majority of those transactions – currently do not attract the GST.

Frydenberg told The Australian: “We don’t want to see a hollowing out of domestic retail businesses as a ­result of this,” and that, “My sense is that we are seeing local retailers with one hand tied behind their backs.”

The government has signalled it will seek to drive a discussion about economic reforms next year, and a taxation white paper will form the basis for a significant part of that. The states, which own the GST, have been told that changes in the application of the tax are on the table if they can agree on the terms.

One of the problems is the technical implementation and policing – figuring out where to impose and collect the tax. One way to tackle it would be to strike agreements with major online companies with retail operations like Amazon, Google, and Apple, or through the payments channels like Paypal and the major credit cards. But it’s unlikely they would be receptive to the idea of making their products less competitive, and it doesn’t deal with the scenario where an Australian is buying from a small random website in China – in fact, it might drive more business to those kinds of sites.

However Frydenberg confident that with “good technology, we can bring down the cost of compliance to police online sales.”

There’s more at The Australian.

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