Are we about to pay GST for shopping online?
One of the big benefits of online shopping is the GST exemption, which applies to imported products under $1,000 and saves shoppers 10 per cent. But local retailers have long complained that this gives international companies an unfair advantage and former Treasurer Joe Hockey announced in August that the GST will be applied to all products sold into Australia from July 1, 2017. So what does this mean for online shoppers?
While full details of the plan haven’t yet been released, in a nutshell the new policy means that goods purchased from overseas will be more expensive. Initial reports suggested that the $1,000 threshold would simply be lowered but Hockey said that abolishing the threshold altogether made more economic sense. A new threshold would cost too much to enforce, so it is easier to charge everyone rather than a select few making purchases of a very low value. The government and retailers have long argued that Australia lags behind the rest of the world in terms of import tax and that the addition of the GST will bring us into line with other economies. Australian taxation officials will meet with international vendors around the world so they can register for GST.
The main question is around how the new policy will be implemented. The vendors will of course pass the new charge onto their consumers, either at the checkout or at the parcel’s point of entry into Australia. This is where things get tricky. Small operators who aren’t registered for GST with the government would have to have their liability assessed by Australia Post or another entity when the product arrived in the country. This would then cost the government more than they would receive in GST, and they would pass this on to the consumer. According to Choice, this could mean customers would have to pay GST and a parcel collection tax when they collected the parcel, as has happened in other countries.
The added tax comes alongside the dramatic fall in the Australian dollar. As of September 2015 the dollar is sitting at around US0.70c, a fall of around 30% from the heady days of parity in 2011. Online purchases from US giants like Amazon are now on par, or even more expensive, than local retailers.
Can you avoid it? Potentially. Using a virtual private network, or VPN, to disguise your online location could get around the regulations. Or you could try a parcel forwarding service that will keep your Australian identity a secret. But there’s a good chance that the government will know about these little tricks too. So, now could be the time to shop local, either online or in stores. Do the sums and vote with your wallet.
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