Online resellers to get 12 month reprieve from low-value GST laws
- 19 June, 2017 15:44
It looks like eBay will have an additional 12 months to prove whether it will make good on its threat to block Australians from buying goods from overseas on its platform.
Parliament has voted in favour of delaying the introduction of the proposed Treasury Laws Amendment (GST Low Value Goods) Bill 2017, which would compel online retailers to collect Goods and Services Tax (GST) from Australian customers on overseas purchases worth less than $1000.
On 16 February 2017, the Government introduced law to Parliament that will amend the law to extend GST to low value imports of physical goods imported by consumers.
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 proposed law 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 legislation passed the House of Representatives on 14 June, but was subsequently 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.
While the amendment is yet to be reviewed by the Government’s Productivity Commission, if it is ultimately kept when the legislation passes into law, it will give online retailers an additional year to get ready to charge GST on sub-$1000 items from other countries.
It will also give local retailers another year within which they must compete with online sellers of GST-free internationally-sourced products, a large proportion of which fall into the IT and technology categories.
One of the online platforms set to be hit heavily by the proposed law is eBay which, understandably, argued against the scheme in its submission to the Parliamentary committee that was charged with reviewing the measures.
“The proposed legislation is complex, inconsistent, unworkable and will harm Australian consumers in many ways,” eBay Australia and New Zealand’s vice-president and managing director, Joo Man Park, said in the company’s submission, dated 10 April.
“It is open to abuse by foreign companies, it exposes Australians to the risk of double taxation, it will reduce price competition and choice for all Australians who shop online, and it will drive online trade away from trusted, cooperating online marketplaces to the dark parts of Internet,” he said.
Further, eBay pointed out that the proposed legislation bears a striking resemblance 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 digital products and services GST legislation was passed by the Senate in March and is set to take effect on 1 July this year.
“The legislation has been copied from the intangible goods legislation (“Netflix tax”) and hastily modified,” eBay said. “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.”
In fact, eBay went so far as threatening to potentially block Australian buyers from international sellers if the legislation goes ahead.
“Regrettably, the Government’s legislation may force eBay to prevent Australians from buying from foreign sellers. No tax would be paid to Australia and none would be owed,” Park said in his submission.
As the Bill stands, Park suggested, Australian consumers would be asked to pay an extra 10 per cent to foreign businesses with no guarantee the money will ever be remitted to an Australian tax authority.