GST-Free Threshold Axed: 10% Tax Coming To All Overseas Purchases

It's official: All overseas purchases under $1000 will soon be subject to a 10 per cent GST surcharge, following a consensus on tax reform between state and federal treasurers. In other words, your future Amazon and eBay orders are going to be treated the same way as a local purchase. Call it the Gerry Harvey tax.

For years now, Australian retailers have been lobbying the government to abolish the $1000 GST-free threshold for overseas purchases, which they claim put local businesses at an unfair disadvantage. Well, it seems their prayers have finally been answered.

Treasurer Joe Hockey confirmed today that all overseas purchases will be taxed at the full 10 per cent GST rate from 1 July 2017, following an Australian treasurers’ tax summit.

Treasurers agreed to apply the GST to offshore sales into the Australian market. This is a significant initiative. From the 1 July, 2017, the GST will be applied to all products and service sold by vendors into Australia. This will deliver competitive neutrality for Australian businesses, and ensure fair and equal treatment of goods and services. If goods and services would have the GST applied in Australia, then the same should apply for goods [bought and imported] from overseas.

The two-year interim will allow the state and Federal governments to design and implement a scheme for the collection of said tax. Worryingly, the Treasurer indicated that if a viable system can be worked out beforehand, the commencement date could be moved forward.

The co-called "parcel tax" will be charged to overseas vendors who operate in Australia, who will adjust their pricing accordingly. To bypass the difficulty of enforcing every offshore site to apply GST, the tax will likely be added as a "processing fee" which consumers would have to pay before the goods can be delivered.

As we have noted in the past, this seems like a pretty harebrained scheme that will potentially cost more to implement than the amount of revenue collected from it. Plus, the overseas price for electronics will likely remain cheaper anyway, which means local retailers will still be operating at a disadvantage. The only difference is that online shoppers will be paying a bit more.

From a consumer's perspective, this is obviously a huge annoyance that will squeeze our wallets in yet another way. That $200 pair of headphones suddenly doesn't look as attractive at $220. Expect plenty of these conundrums come 2017.


Comments

    Except those $220 headphones (with the tax) cost $350 in local stores so nothing will change. This is just a way for the government to get more money for cigars, wine and helicopter rides.

    Also if the government was trying to rally be fair this should also apply to all duty (tax) free purchases. Including alcohol, smokes etc.

    Remember: "There will be no new taxes under an Abbott Government".

    Well, most of the modelling that says collecting GST on imports below $1000 is based on the idea that it would have to be collected individually from the customer for each purchase.

    If they can compel the international sellers to collect the tax on the government's behalf (like Australian businesses do), then the administrative costs would be a lot lower. Presumably this is what they hope to achieve by 2017

    Another harebrained scheme from a harebrained treasurer.

    No 'Finance Minister of the Year' award for Eleventy.

    Another pointless tax. It's still going to be cheaper to buy stuff from overseas with the rip-off prices Aussie retailers charge.

    All imports? That's ridiculous. I have no issue with lowering the threshold, and even lowering it significantly (I prefer the money in my pocket rather than the govt's, but can understand that this does impact local stores. Not Gerry Harvey, who can go f' himself the greedy prick - but small stores who can't compete with online prices) but how on earth are they going to implement something with no threshold, and even worse make it the responsibility of the seller?
    There are already such a huge number of online stores that don't sell to Australia for various reasons - this will just be an incentive for MORE online stores to not sell to/ship to Australia because of the extra hassle involved. So we'll be essentially even more cut off and segregated from the rest of the world than we already are. Yeah, awesome. Will the extra $$ raised go towards paying for the family travel rorts?

    Well, technically this is just an extension of an existing tax

    No changes to GST eh...
    http://www.liberal.org.au/latest-news/2013/09/05/final-update-federal-coalition-election-policy-commitments

    As small business owner who pays all taxes in Australia totally in favor introducing GST on online imports as importer we have to pay GST on goods and fright on all imports plus customs clearance fee and custom duty depending on product and country we importing from. Current duty+GST free arrangements for goods under $1000 is exporting Aus jobs oversees. Beside GST and import duty need to introduce customs clearance fee this will cover the cost monitoring and controlling online imports and help to rise taxes.This will create more Au jobs.

    http://www.audioshop.co and http://www.audiobuy.com.au ship many products into Australia at below the 10% threshold. Now our customers will be paying more?

    Robert , the import tax you pay upon import is refunded to you by the Government.

    http://www.audiobuy.com.au

    We are currently investigating ways to keep prices low and promise guaranteed landing costs after this threshold altering is processed.

    What is the import tax into India ?

Join the discussion!

Trending Stories Right Now