Productivity Commission To Examine $1,000 GST-Free Threshold

Goods ordered online from overseas aren't subject to GST if the total order value is less than $1,000. That rule could change depending on the outcome of a newly-announced Productivity Commission investigation into retailing in Australia.

Large Australian retailers have complained that offshore shopping is depriving them of business, and that they can't compete with GST-free offerings. On the other hand, as Nick over at Gizmodo pointed out recently, retailers like Harvey Norman aren't even trying to compete by selling online, which makes their protests sound hollow. And assistant treasurer Bill Shorten notes that online sales account for less than 1.5% of the total Australian retail market, so it's hard to see the threshold as a business destroyer in and of itself. Nonetheless, we'll be keeping a close eye on the outcome.

Government launches online shopping enquiry [ABC News]


Comments

    GST is only 10% - I am pretty sure retailers like Harvey Norman have at LEAST 10% of breathing room to negotiate on pricing.....

      When products are 20, 30 even 50% cheaper online what is charging a 10% GST going to achieve, other than make me NOT want to spend my Money at Harvey Norman.

      I don't see Ruslan Kogan petitioning for a 10% gst on imports.

    And the local retailers don't have to post you the item. Surely that's similar to the 10% GST.

    What a joke... Millions will be wasted on a study brought about by Gerry Harvey's whinging. the cost of administering a scheme would outweigh any revenue generated, and the only ones to benefit would be Gerry and his retail cronies, not the consumer...

      No likely.. the only people to profit (maybe) will be the government, and the extra customs staff they'll need to process all the tiny GST charges..

      Importing will still be cheaper, even after shipping and GST.
      It's a crappy argument that has holes so big even a child could pick them!

    I do hope they start to looking into the fact that most pricing miss match is due to the importer not dropping their price to the reseller.

    I would like to see what sort of pricing model most importers use to value their products.

    Yeah like the 10% GST will make a difference. I often save closer to 30%, and that's even after huge delivery fees!

    Aussie retailers just want the benefits of a 'captive market' and are pissed that they now have some real competition.

    Having lived in a country that still clung to a very low exempt threshold on overseas mail I make the observation that the worst part of lowering the threshold would not be the charge itself but the need to travel to some edge of town barn that is only open during the same hours I work to pay some disinterested servant of the state the $5 or whatever I owed (plus the $30 "service charge" for the obvious pleasure).

    This generous threshold is to me one of the most grown up things about Australia and I for one would greatly mourn it if it passed.

    I would not reward Hardly Normal by rushing to shop at his stone age stores! - To start with I can only think of a couple of offshore items that might just have been in their range of the hundreds I have bought.

    Secondly, in stores like his, most of what is sold is either big box OR "white goods" and neither of these are within my comfort zone for overseas shopping [I want my telly with a usable warranty].

    GST is nothing compared to savings by shopping overseas. Best example recently was a book that retailed for $170 in Aus. $25 from the book depository. I don't think the potential $2.50 GST would have changed much.

    Infact I encourage a change to charging GST on everything as it would require an update to the absolutely pathetic system customs currently uses to process such payments. Last time I bought something over $1000 it sat for over a month while it was stuck in our disaster of a system.

    Even with GST added I can still buy goods overseas cheaper than I can here in Australia. Unfortunately a lot of Australian companies want everything their own way and handed to them on a plate.

    If they bring in GST on goods less then $1000 imported I hope they start imposing taxes on foreign outsourcing to make the local services industry competitive. It's essentially the same principal, these foreign companies can charge a lot less because they don't need to pay the overheads of local companies (rent, wages, taxes ect).

    They won't do anything like that though because that would hurt businesses and they are far more important then people.

    This is a danger to all small retailers (online or otherwise) in Australia who quite legally use the $1000 duty free import threshold as a matter of course to import stock and remain competitive with the big boys of retail. For businesses whose owners simply make a living and don’t feel the need to accumulate millions of dollars ..or debt, this is a massive threat to our existence.
    For the likes of Gerry Harvey & Solomen Lew, the cost of goods imported to Australia by container load is around 10% or less of the cost of the same goods when imported in smaller quantities by Australia’s small retailers. The GST their companies are required to pay on these items is therefore 10% of what a smaller retailer would be required to pay if their import totted up to more than $1000 AUD or if the Duty Free Threshold was reduced or scrapped.
    These old dinosaurs are scaremongering about a foreign threat when really they’re trying to stifle competition from small Australian businesses. Australian’s who enjoy the freedom to spend their dollars just where they please and care for small Australian business need to stand up to these old men of retail and boycott Harvey Norman, Joyce Mayne, Domayne, Just Jeans, Jaquie E, Smiggle, Peter Alexander, Portmans, dotti, Jay Jays etc. Australian’s investing in those companies should start looking at moving their money to more dynamic businesses models that don’t engage in anti-competitive behaviour or rely on government intervention to wipe out the small fish in their pond and the Australian people to foot the bill for it.

    People also have to remember that Bricks and Mortar stores have huge expenses compared to online.
    Rent, power, phones, point of sale, displays, staff wages, superannuation...etc etc etc.
    This is never mentioned in any news reports or studies....just the scandal that a company is trying to make a profit.
    Yes you can save a lot, but in the end I still want stores to browse in, and walk about in.

      Well Shane, you are welcome to continue doing that. The other 1.5% of us will buy online/overseas :)

    These whinging retailers need to take this issue up with their SUPPLIERS and not their customers... you know, then same suppliers that are happy to sell to an individual like me (via retailers in other markets) for cheaper than they supply to Mr Harvey and his mates. Hardly MY fault.

    And perhaps if they cut back just a bit on the saturation radio/tv/newspaper advertising... they could take 10% off their store prices.

    Mr Harvey... talk to your suppliers. Cut back on ads. There's your 10% back to be competitive. And if you can't beat them.... JOIN THEM... !!! No one is stopping you from becoming an internet retailer. It's a brave new world. Evolve... we all know what happens to dinosaurs.

    Slightly OT but related to the problem at hand... was in a HN store on Friday buying iTunes cards on special for Xmas gifts. Was amazed at how manual and antiquated their invoicing system is... they still use DOT-MATRIX PRINTERS and fan-fold-multi-part invoice paper... tell me THAT's not THE most costly method of checking out every single customer. x every register, at ever store.... even the NEW ones. WHY !!! Modernise. There.. I just saved you some MORE money Gerry. Now leave me (The Customer) alone please :-D

    The facts are that the current level of $1K was set entirely because anything under that was deemed to be not cost effective to administer and recover. That simple fact has not changed, no matter who complains to who about what.

    Good point about Harvey Norman (and others) not even trying to compete online. They have failed miserably to come up with a good online retailing model.
    Instead Gerry Harvey bores us with his tiresome whingeing.
    One reputable TV retailer not far from me has made the switch to online sales and is going gangbusters because their prices are easily accessible, low, and backed up by a really good warranty service centre.

    I went to Harvey Norman a couple of days ago to buy a 32gig MicoSD card for my phone. The best they had was a 4gig on the shelf, but they offered to get one in for me. It would take a week! Well I'm sorry Gerry, but I can do that myself, and for half the price!
    Also worth mentioning...
    The government does not miss out on collecting the GST for imported commercial items of less than $1000 value which are then resold in Australia. GST is added at point of sale for the full retail value. However, the business does not get to claim any input for GST already paid. So the end result is the same, and the government gets exactly the same amount of GST.
    So of that 1.5% online sales, only goods imported by individuals for private use are escaping paying the GST.

    I run a small business that does software distribution. We have price parity with goods from the USA, except that we have to charge GST. I find that many of our customers, including larger corporations prefer to buy overseas so they can save the 10% GST. Most of these purchases are over the threshold and the customers are unaware of the threshold anyway. My firm is missing out on probably $10 million in sales because we need to charge GST. So I'm looking at running the business from overseas in order to be able to better compete (and Australia will then miss out on my firm’s taxes).
    But the main problem is that the Government is missing out of hundreds of millions in GST revenue due to Australian firms buying goods directly from overseas and not paying their GST -- customs never chases up these firms to claim the GST they should be paying.
    The fact that the consumer is saving 10% is an insignificant aspect of the problem. It's the larger firms avoiding their GST that is the main problem – and that is a large loss of Australian taxes that then forces up the taxes the rest of us must pay.
    Then there is the unfair situation Australian sellers have in competing with overseas sellers. Why should Australian sellers be disadvantaged?

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