Is Apple Charging An Australia Tax On The New iPhones?

Image: iStock

The old subject of whether Aussies are paying too much for their tech rears its head whenever a new, expensive product hits the market. And I've been seeing a few people already complaining that Apple is charging their so called "Australia tax" here, bumping the price up on the new iPhones that were announced yesterday. So, are we being fleeced by Apple?

The first thing to remember is that sticker prices aren't real prices in the United States. Almost every state adds their own taxes to whatever price you see advertised on an item. Delaware, Montana, New Hampshire and Oregon are the exceptions. Alaska doesn't charge state taxes either but localities within the state do.

When you buy an item, you can expect as much as another 10% on top of the sticker price.

In other words, the $999 price on the 64GB iPhone X is only going to apply to a small portion of the population.

So, in order to even the playing field, I'm going to compare prices based on the Apple sticker price, which doesn't include any state sales taxes, with the ex GST Australian prices.

The critical issue in pricing is the exchange rate. At the moment, it's sitting at around $0.80.

Looking at the table below, if the exchange rate was around US$0.70, then local prices would be very close to the US prices when you exclude GST and US state taxes.

However, the Aussie dollar is trading at about US$0.80 at the moment which means the balance has tipped and US pricing is better value than what we can manage locally. If there Australian dollar keeps strengthening relative to the Greenback, as some commentators suggest, then we'll be paying around a $300 premium.

Source: xe.com

It's possible, if the Australian remains relatively strong, that Apple could revise their pricing before pre-orders open on 27 October 2017. But I wouldn't hold my breath for that.

The reality is all multinational companies need to set hedging strategies to protect their margins from currency fluctuations.

It seems that Apple is betting on the Aussie dollar hovering around the US$0.70 mark, assuming they are looking for price parity between the two countries. But that seems to be very conservative given the dollar has been steadily creeping up since around May this year.

Source: xe.com

Are we paying an Australia Tax? I'd say it's clear we are paying more than the current exchange rate would suggest is equal to US pricing. It seems to me that Apple has taken a fairly conservative view of the Australian dollar's value.

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Comments

    Here's the thing. pricing will vary depending on currency at the time the stock is puchased, then theres all the predictable stuff (frieght etc etc), but the tax part probably has more to do with the bullshit "merchandising" fees and dodgy rebate deals etc that the likes of Harvey Norman and JB Hifi charge (I dont know why JB charges merchandising fees, their stores look like a tip most days).

      ANother interesting side note. Getting indignant that the next i-widget costs more is one thing but consider this. Apple pays bugger all corporate tax in many countries.

        Apple might not pay huge amounts of corporate tax but they do pay quite a lot of tax in Australia that everyone forgets. Also nor should they pay lots of corporate tax, as corporate tax is a rout, you need to tax people not companies when the government starts taxing all those rich people more then we can talk. We need personal tax reform!!!
        They employee quite a few Australians unlike the other tech companies that get called out, ie MS, Adobe and Google.
        So they pay quite a lot of payroll tax and then all their employees also pay tax.

      Well it took me ages to buy a smart phone now i have joined the club similar to buying an ultra 4k television you take your time & look around. As there are a number of brands in the market Apple seem to have a massive foot hold in the market. Although it's relatively new it may not be as popular as Samsung or Apple it's a stunning piece of work @ $447 64GB's The Oppo A 77 it does the trick very nicely, and a 5.5' screen excellent.

    The problem with defining this is that Apple doesn't tend to perform regular price changes, so they are selecting a pricing point which will be used for some time. So, they are in fact betting on the exchange rates heading in a certain direction or holding steady.

    Using the worst exchange rate over the last 180 days (Mid-Point Rate) and using the AUD Ex GST price would net Apple $1056.06 not considering any cost overheads.

    I cannot say I would loose any sleep over paying $57 more than the US.

    How can a US$999 vs an AU$1839 be anything but a tax.

    this is very close to 100% .

      Add sales tax to the US price for a start. And the price you're using is for the 64GB US price vs the 256GB AU price. Then it depends on what exchange rate is being used. But it does seem Apple has taken a very conservative view.

      It's not exactly fair to compare the price of a 64gb iPhone X in the US, with the price of a 256gb iPhone X in Australia.

        That wouldn't create any outrage though would it! hahaha

      Yeah but that $999 price is if you're buying it on a contract. Outright is more than that. Which is not shown or mentioned anywhere on the US Apple website.

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