After months of rumours and "tests", Netflix is officially jacking up its prices in Australia. From next month, existing customers will need to pay up to 20 per cent extra for the service. (The price increase kicks in from today for new sign ups.)
This is significantly more than the government-imposed GST "Netflix tax" of 10 per cent. Our take? We're basically getting shafted, and the new tax is being used as an excuse.
From July 1 2017, the Federal Government will apply the Goods and Services Tax (GST) to all digital products and services supplied into Australia. Ever since the bill was passed, we've been waiting for digital service providers to announce pricing changes that pass the tax onto consumers. Netflix is the first company out of the gate, and it's a bigger price hike than we were expecting.
From July 1, customers on the entry-level $8.99 plan will need to pay $9.99 per month. $11.99 plan members will need to pay $13.99. The premium $14.99 plan will rise to $17.99. That's $1, $2 and $3 extra per month, respectively - or a difference of up to 20 per cent.
That means premium customers will now be paying $36 extra per year. This is a significant increase and well above the 10 percent GST applied to digital products from July 1. Nevertheless, that's precisely what Netflix is blaming the price hike on. Here's the official statement from the company:
"In light of the upcoming GST increase, we will be rolling out updated plans and pricing starting June 28 in Australia. Members will be notified of the changes via email and service notifications."
Netflix has attempted to justify the additional increase with the promise of more "exclusive TV shows and movies" and improvements to the service. But let's be honest - we would have been getting these anyway.
It's difficult to view this as anything other than a blatant cash grab hidden behind a new tax. The timing is sneaky and we don't like it.
Meanwhile, Foxtel Now has lowered its entry-level pricing to $10 - and unlike Netflix's cheapest tier, this includes 720p HD. Despite a range of improvements to the service, including offline viewing, Stan pricing remains unchanged at $10 per month.
If you don't want to pay 20 per cent more for a digital service so that the provider can cover a 10 per cent tax, we suggest switching to one of Netflix's competitors. Money talks.
From July 1 2017, the Federal Government wants to apply the Goods and Services Tax (GST) to all digital products and services supplied into Australia. In practice, this means the amount of money you spend on software downloads and streaming services is set to increase across the board.
Here's everything you need to know about the so called "Netflix Tax" and how it will affect your wallet.