Low-value GST laws are go, almost

Low-value GST laws are go, almost

Online resellers take note: low-value GST laws will kick in on 1 July 2018

The Federal Government has passed new legislation that will see online retailers compelled to collect Goods and Services Tax (GST) from Australian customers on overseas purchases worth less than $1000.

But the new laws won't kick in until 1 July 2018, a full year later than initially planned.

The Treasury Laws Amendment (GST Low Value Goods) Bill 2017 was stalled in the Senate on 19 June with the introduction of a new amendment calling for the tax measures to apply from 1 July 2018 instead of 1 July 2017, as it initially appeared in the legislation.

The legislation, including the new amendment, was passed by the House of Representatives on 21 June. The legislation, sans amendments, was initially passed by the House of Representatives on 14 June.

The new legislation amends the law to extend GST to low value imports of physical goods imported by consumers, a large proportion of which fall into the IT and technology categories.

Suppliers with an Australian turnover of $75,000 or more in a 12 month period would be required to register and charge GST under the plan.

The legislation treats the operator of an electronic distribution platform (EDP) as the supplier of low value goods if the goods are purchased through the platform by consumers and brought into Australia with the assistance of either the supplier or the operator.

The approved amendment will give online retailers an additional year to set up their systems to charge GST on sub-$1000 items from other countries.

It will also give local retailers an additional year to continue competing with online sellers of GST-free internationally-sourced products.

The new legislation is similar in nature to the Government’s so-called “Netflix Tax” – the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016 – which sees the GST applied consistently to all supplies of digital products, such as software, and other imported services to Australian consumers.

The similarity between the two pieces of legislation has acted as sore point for eBay, one of the online operators that is set to be affected by the new laws.

“The legislation has been copied from the intangible goods legislation (“Netflix tax”) and hastily modified,” eBay said in its feisty submission to the Parliamentary committee that was charged with reviewing the measures.

“The distribution of software or an application by its owner or licensed distributor is quite different to the purchase of a physical good in another country and the incompatibilities should have become increasingly apparent to those drafting the Bill,” it said.

The digital products and services GST legislation was passed by the Senate in March and is set to take effect on 1 July this year.  

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