Sales tax fear sparks reseller buying spree

Sales tax fear sparks reseller buying spree

Many Australian resellers pulled a swifty on distributors in the weeks leading up to the September 1 sales tax deadline by placing massive stock orders in a bid to buy time to acquire sales tax accreditation from the Australian Taxation Office.

When contacted by ARN last week, a number of Australia's leading distributors, including Digiland, Tech Pacific, CHA and Prion Distribution Technology, confirmed they had received orders from some resellers in the order of five times or $100,000 above an average purchase.

However, uncertainty surrounds whether the abnormal purchasing patterns in August were caused by resellers out to rort the system or by honest resellers who have struggled to meet the stringent demands of accreditation and are simply buying time.

Reseller surge

Melbourne-based wholesale distributor Digiland felt the unusual surge in reseller demand from the beginning of August right up to the Septem-ber 1 deadline, according to the organisation's managing director, Laurie Carmichael.

"It was more than coincidence that we were receiving orders from some of our resellers that were extraordinarily high," Carmicheal said.

"In some cases, resellers who previously had only purchased small amounts of stock from us were lodging orders in August that were five times larger.

"This practice certainly caught our eye because we could not be sure whether they were doing it to try and buy time to get accreditation or whether they were trying to stock up and cause trouble."

Digiland, one of the country's biggest Hewlett-Packard distributors, was right in the firing line of resellers looking to buy up big before the September deadline.

The distributor has excelled in its sales of HP's line of DeskJet laser printers - one of a number of peripheral products targeted by the reseller buying sprees.

Prion's managing director, Michael Bosnar, also witnessed "plenty of August activity" from resellers stocking up on Hewlett-Packard DeskJet and low-end laser printer lines.

However, he could not confirm whether those resellers were trying to dodge the tax system for one last time or whether they were legitimately trying to get some breathing space in a bid to secure sales tax accreditation.

"If the latter is the case, it certainly means these resellers have made a massive up-front investment and will have extremely tight cash-flows until such time as that stock runs out," Bosnar declared.

Further buying irregularities were also reported at CHA and Tech Pacific during August. According to CHA's national marketing manager James Robbins: "We certainly witnessed a number of resellers boosting their orders before September 1.

"The common response from these organisations was: 'We have to stock up now before the price of IT equipment goes up after September 1'."

Robbins recalled examples where resellers placed orders with CHA in excess of $100,000 more than their standard orders.

Tech Pac's managing director David Cullen expressed similar surprise when he revealed the distributor had been bombarded with excess stock requests.

"There was a climate leading up to the sales tax deadline where some of our resellers placed unusually large orders with us," Cullen said.

Dummied up tax forms

"We have also seen instances where some of our resellers have presented dummied up authorisation forms in an attempt to beat the sales tax net," he added.

Meanwhile, ITG Computers' national sales and marketing manager, Braham Shnider, hit out at the Australian Taxation Office (ATO), claiming sales tax compliance costs "are a joke". He added that having to gain authorisation from the Tax Office for every order the distributor receives from resellers is a crazy situation that must be reviewed.

Sales tax shake-out continues

by Peter Young

CANBERRA - The number of computer industry suppliers seeking accreditation for sales tax exemptions continues to fall far short of official expectations.

Even though the September 1 deadline passed three weeks ago, only 3000 manufacturers and wholesalers have come forward for accreditation instead of the 5000 anticipated by the Australian Tax Office (ATO).

One explanation may be that many have decided accreditation is an unnecessary business luxury.

"Accreditation is not mandatory and a number of people may have taken the view that they will buy tax inclusive," said ATO assistant commissioner, withholding tax, Mike Cebalo.

Another possibility is the new sales tax system has already caused a shake-out in the industry.

"We have a feeling that some of the businesses that have been on record as being in the industry are no longer operating," Cebalo said.

From the ATO's perspective, Cebalo said the shortfall in numbers was irrelevant, "provided the industry is operating satisfactorily and tax is being accounted for".

Follow Us

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments