Dear Lifehacker, there was quite a bit of noise generated a few months back on paying GST on Netflix and governments blocking file sharing websites. I’m interested to know what’s happened and if the sky has fallen in for any of the impacted users? (I don’t currently use these services myself.) Thanks, Netflix Luddite
The so-called “Netflix Tax” was indeed part of the Federal Government’s 2015 Budget proposals, formally as the Tax Laws Amendment (Tax Integrity: 7 GST and Digital Products) Act 2015, intended to apply GST at the going rate to digital products and services, which would include Netflix and any other overseas-sourced streaming services.
A draft of the bill was released for comment, which closed recently. You can read that here if you’re very keen, but that’s where it currently stands. As proposed, the law wouldn’t come into effect until July 1st 2017, at which point digital goods would have to attract GST at the current rate at that time.
It’s still a somewhat murky area given it crosses international borders, and as such the issues of compulsion to collect aren’t entirely clear. The draft act does contain provisions around simplified GST registration for foreign entities, who have to make “reasonable” steps to ensure that a customer is Australian, but it seems likely that either Australian consumers will dodge it for many GST-liable digital purchases, or companies may not bother. That may not apply to Netflix, however, as it’s of a large enough scale that it would be a rather obvious target if it flouts the law — but that remains to be seen.
You note that you’re not currently a Netflix subscriber, but let’s do some rough calculations based on Netflix Australia’s current pricing regime.
Right now, the pricing tiers sit at $8.99, $11.99 and $14.99. The GST calculations, presuming GST isn’t also increased, something that’s been a bit of a political football of its own recently, would see those base rates jump to $9.88, $13.18 and $16.48 respectively if directly applied. Netflix could always alter its pricing scheme to absorb more of the GST if it chose to, given it ultimately sets the pricing “rate” for its services.
Have a question you want to put to Ask Lifehacker? Send it using our [contact text=”contact form”].