Legislation for the Turnbull government’s plan to tax low-value imported goods, announced in the 2016 Budget, was finally approved by parliament today, but the GST won’t kick in until a year later than the government hoped.
The GST will now apply to goods costing $1,000 or less supplied from offshore to Australian consumers from 1 July, 2018.
The new law, first proposed by former treasurer Joe Hockey, means overseas suppliers and online marketplaces such as Amazon and eBay with an Australian GST turnover of $75,000 or more will need to apply GST to sales of low-value goods to consumers in Australia as part of what the government calls a vendor collection model.
Currently, low-value imports (with a customs value of $A1,000 or less) are GST exempt, and retailers such as Harvey Norman’s Gerry Harvey have been campaigning to remove the exemption.
Treasurer Scott Morrison said passing the legislation was “a win for Australian retailers, by removing the unfair advantage foreign businesses had with respect to GST”.
“Removing a distortionary tax advantage to foreign businesses will restore integrity to Australia’s tax system to close down loopholes and prevent tax avoidance,” he said.
But the delay in getting the new laws through has seen the start date put back 12 months from next week to 2018.
Morrison said the new start date “strikes a balance between giving additional time for industry participants to make system changes to implement the measure, and not prolong the current uneven GST treatment faced by domestic retailers”.
The measure was estimated to bring in around $300 million in extra GST over three years when it was announced 15 months ago, but concerns remain over compliance and how the GST on imports will be policed.
Switzerland also plans to introduce a vendor collection scheme in 2018.
The changes in Australia now mean that an overseas supplier of both low and high value goods will be subject to two separate tax regimes, with requirement to collect GST applying only to low-value goods.
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