Australian Government Confirms Netflix Tax

On the eve of the 2015 Federal Budget, Federal Treasurer Joe Hockey has confirmed that Australia will get a new "Netflix Tax" on digital services.

The so-called "Netflix Tax" isn't a brand new levy for online services. Instead, Treasurer Hockey said at a press conference this afternoon that the Federal Government would charge the 10 per cent Goods and Services Tax on top of these digital services.

It's unclear which services will have the GST applied to them, but it could encompass everything from Netflix right through to services like Uber rides and Steam games.

According to Hockey, this GST extension wouldn't apply to products that cost under $1000 imported into Australia. That's because the Treasurer agrees with a 2009 Productivity Commission report which said that would cost more to enforce than it would make in tax revenue. Hockey said in a press conference that the Government would go to tech companies and ask them to hike their prices by 10 per cent and send that extra revenue to the Government in the form of a tax.

Hockey said:

What we're doing is going to digital providers overseas and saying 'can you apply the GST to the products you provide into Australia?'. They [the tech companies] are agreeable to it. It's not their profits [being taxed]. It's a tax collected and they remit it back to the country where that [consumption tax] occurs.

Hockey flagged that the extension of the GST onto digital service would raise $350 million over four years. That revenue will be given straight to the states.

Draft legislation will be tabled before the House tomorrow night during the unveiling of the Federal Budget.

We're reaching out to the Opposition for comment on whether or not it would pass such a Bill.

Developing...


Comments

    Fuckers

      It's understandable, now that the internet is taking over from TV, the tax revenue has to come from somewhere. It's only 10%...for now...

    Hey government... F**k you.

      If you use a VPN and US Netflix and Hulu charged in US dollars this will have zero impact on you.

      It's only when you happen to be paying an overseas supplier in Australian Dollars.

        If you're going to pay a conversion, you may as well pay the tax.
        The difference is going to be negligible.

          Agree with you, but this reasoning is only valid if you are happy with watching the content available on the Aussie Netflix only. If you want to watch Netflix's full catalogue from the US, UK, Canada, etc. then it's better value for money to sign up to a US Netflix account through your VPN, thus avoiding the GST and getting access to Netflix's global content.

            you can have an australian account and use a vpn to get the us content. if a american came over here and used there account they will only get australian content unless they use a vpn.

              Yes, you are absolutely right adze. I actually have an Aussie Netflix account and using my VPN to access US content.
              I guess it's just a matter of juggling and comparing the possible savings between one's subscription costs to a VPN service versus the new GST on Oz Netflix.

              Last edited 12/05/15 9:11 am

        except I can't use hulu with my PIA VPN it detects it

          Have you tried IPVanish? http://www.vpnworld.org/ipvanish My Hulu doesn't detect my VPN. I think that you can try them out for 7 days or get a refund.

          Use a different US gateway on PIA (and if you've tried that, contact support)

          Last edited 12/05/15 9:00 am

            yeah I've tried every gateway on there, it always comes up saying that they've detected my VPN and if I'm in the US to turn it off, I'm not too worried I'm told Hulu has ads anyway, just wanted to check it out.

    Really interested to see how this is supposed to work?

    Let's say I am an American running superawesomestockphotosofbutts.com
    An Australian customer comes to my site and buys $20 worth of butt photos.

    Am I now supposed to collect an extra 10% and forward that to the Australian Government somehow? What happens if I can't be bothered?

      Can you provide some more information on this website of yours, please? For... research.

        Have you ever been working away on an important business presentation, only to discover at the last minute that you can't find the right butt to get your point across?

        Fear not! superawesomestockphotosofbutts.com is here to help.

        Our extensive library of butts is sure to have exactly what you need.
        Sporty butts? We got you covered http://i.imgur.com/yZ3Wyeh.jpg
        Casual butts? Got 'em. https://s-media-cache-ak0.pinimg.com/236x/99/4f/d4/994fd42bac4a4d685d1d445b12e61802.jpg
        Formal butts? You bet! https://c2.staticflickr.com/6/5503/11800535756_bb026550dc_b.jpg
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        * Sizes refer to image dimensions, not actual butt size.

          Improved sporty butt https://i.imgur.com/nO4zuSr.jpg

          Well played sir :-)

          I'd like to see more of those sporty butts in particular. For science, of course....

          Dude, an NSFW on your links would have been appreciated!

            Well my boss liked them.

              I did too, and my boss was close to seeing them.

                The irony is that his boss (me) is also his father (not that he and his twin sister knew that until now) and sits only a few metres from him.

                  No. No. That's not true. That's impossible!

            I can understand how you must have been shocked to find pictures of butts behind those links.

            Last edited 11/05/15 5:01 pm

            You couldn't gather that from them being butt pictures? Haha.

          Dear sir or madam,
          I am a wealthy businessman with a diverse investment portfolio.
          Upon reading your post I have decided to sell all my assets and invest in your website.

          Please forward me your bank details so that I may transfer my life's earnings to you

            Nigerian Prince, is that you?

            Edit: Why are all my comments being moderated? What did I do? Is it because i'm brown?
            Thank you, come again.

            Last edited 11/05/15 5:30 pm

      Not sure if a website of clouds or butts. Dammit cloudtobutt

      Completely agree. It's going to take a bucket load of resourcing to collect this.

      As a side point $350m = $87.5m per year
      So that's suggesting there's only $875m of "digital services" to tax (sorry but that figure seems really low, suggesting this tax isn't applying to alot of things)

        It will probably only apply to companies with an office (registered business) in Australia. Otherwise it would be completely unenforceable.

      If that $20 is charged to the Australian in US Dollars - this is completely irrelevant to you.

      Unless superawesomestockphotosofbutts.com has 200,000 Australian customers and a national newspaper highlights this fact, I can't see the government approaching them.

      I really think its going to be more the big players with an Australian presence that will be affected, streaming services, itunes, uber etc.

    Given how local publishers enforce price parity with brick and mortar stores on Steam, I wouldn't expect prices there to change.

    HAHAHAHAHAHAHAHAHA

    I get the impression that Joe Hockey doesn't really understand how the GST works. That's not really surprising, considering he's just the treasurer. Is he going to allow these foreign companies to deduct the cost of collecting and forwarding the tax? If so, how will they report that? Does he expect Netflix and others to complete and submit a quarterly BAS like Australian companies? How does Joe intend on enforcing it, considering he has absolutely no authority to compel foreign companies to comply with Australian law? Will the ATO be given the power to issue infringements to foreign companies?

    Seriously, they just don't have a clue.

      I'm with you. While they might want to get them to charge GST, from a technical standpoint it's not that easy. Like you said, will they be able to claim GST credits back as well?

      However, I've a feeling that although it's being called a GST by the media, that it won't be THE gst. If you read the Hockey quote above, , he called it "a tax" that would be collected and remitted back. So they could get around the BAS/ABN issues by calling it a digital tax, or something, rather than the actual GST that applied within Australia

      They'll "incentivise" the companies, by allowing them to keep a portion of the tax as pure profit...

      Australia isn't the first country to charge gst/vat for digital purchases (UK, South Africa, various European countries, certain states in the US) so I'd imagine that Hockey will simply follow what they are doing.
      Or of course no one thought of how to collect a new tax and you just know better than everyone.

      Last edited 11/05/15 11:57 pm

    So we all get CC issued in the US, transfer our money onto them and this online GST can get bent. I'm not paying this BS ontop of Australia tax we pay for games on steam.

    Last edited 11/05/15 2:53 pm

    So I will now pay $13 per month for my Netflix plan...I still see it being pennies in comparison to Foxtel.

      Perhaps if Netflix had a fraction of what's available on Foxtel but from what I've seen you'd Need Presto, Stan and Netflix to get close, which also means you'd be paying a similar amount.

    What we’re doing is going to digital providers overseas and saying ‘can you apply the GST to the products you provide into Australia?’. They [the tech companies] are agreeable to it. It’s not their profits [being taxed]. It’s a tax collected and they remit it back to the country where that [consumption tax] occurs.

    Anyone else think the discussion went a bit like this?

    We know you guys aren't paying enough tax. This government needs to look a bit tougher when it comes to tax, just so Joe OnTheStreets doesn't feel like he can start withholding income tax. You want to look like you're willing to contribute something to the tax discussion, to offset all these bad PR articles about funnelling profits offshore. So how about this: let us say you agree in-principle to hike your prices to cover a sales tax (though secretly we know that this won't really happen)... or we're going to start making impotent speeches about those offshore accounts and tax loopholes of yours.

    Last edited 11/05/15 2:56 pm

      Actually I think the discussion probably went more like this:

      "Goddammit Joe, Tony promised me he would fix this Netflix threat to my Foxtel. This goddamm American company is charging cheaper prices than I am. And they have better content! And they are killing Presto, and my Foxtel! That's not fair! Fix it! Now."

      "Yes Rupert I understand. Really I do. Tony explained it to me. And so I have fixed it so Netflix has to raise their prices 10%. Hehe, I called it a "sales tax" and it will cost them even more money to collect it."

      "Bah. 10% you say? That's nothing, but it will do for now. But you had better come up with some other ways to tax them some more, or you'll pay come the next election."

        So you're happy that companies that employ Australians are at a competitive disadvantage, as long as it benefits you? Self-centred much?

          I want to say no...no wait. I dont. I want to say yes.

          I am self-centered, and believe that if that company employing Australians wants to compete, then they should up their game, not request the government to change the rules halfway through to suit them.

    I am genuinely tired of politics... How does one get ahead in life financially when every aspect is having taxes raised or added ? I know that my wages have not increased in the last two years.. Even if they did it wouldn't be a 10% rise.
    They just keep taking little percentages of my money away from me so that when I do earn a pay rise I'm not better off than what I was 2 years ago

    People are saying it's only $1.50 a month but it's 10 % on everything you purchase online , which we already pay too much for in the first place. I really really want to stop pirating movies/games and tv shows , Netflix has curbed this and so has steam..
    Except now I pay more again for those services and I am right back to contemplating if I should pay someone for it or download it.

    Last edited 11/05/15 2:59 pm

      How does one get ahead in life financially when every aspect is having taxes raised or added ?

      Be born into money. If Abbot can do it, no reason why you can't.

        are you for real? his wife is from one of the baddest roughest places in New Zealand

        Wainuiomata has bars where Jake 'Once were Warriors' The Muss wouldn't even go into

        Last edited 11/05/15 3:44 pm

          are you for real?

          Why not? Abbot seems to think that being poor in remote areas is a lifestyle choice. So stop choosing to be poor.

          his wife is from one of the baddest roughest places in New Zealand
          Well, good for her, but Tony was born into money, his father established one of the largest orthodontics practices in Australia.

          Oh, right, I see what you were getting at, marrying into money is also a great way to stop beng poor. Good call!

          (To clarify incase my sarcasm is not bleedingly obvious, no I'm not serious. The Liberals have no clue what it's like for middle class and below.)

          Yes, eventually marrying someone from New Zealand (a country so safe the army only needs one gun) sure does make growing up hard!

        The gap between the wealthy and the poor just seems to be increasing everyday and all the people in the middle fall backwards into the poor category.

          *rant - This is because the pseudo-ideology of "neo-cons", like the government we have here in Aus, the Conservatives in the UK, and the Republicans/Tea Party in the US, is that everyone is responsible for their own station in life. Are you poor? Well you obviously haven't tried hard enough. Are you rich? Well you must have deserved it, and obviously must be a good person. There is no middle class worth worrying about, according to these people. They just hide behind the fallacy of "trickle down economics" to justify their opinions.

          Last edited 12/05/15 6:46 pm

    At least he's had the common sense not to try and tax imported goods.

    Don't worry, it will only apply to single-income families...

    Meh. Another dollar on the netflix subscription is not too much hassle. And I buy games at retail or on steam sale anyway so the steam price jump will not be affecting me

    It was a good 2 months. Now back to pirating.

    Just sign up for a US Netflix account without using a VPN service. You still get all the same content when accessed within AUS, and even with the exchange and the credit card international fee it comes out a few cents cheaper than the current Australian price before the proposed new tax

    After this, when I look at a game on Steam I just won't bother unless it's on a super-duper-sale. Paying more USD than the US for a game, then adding 10% onto it is asking too much.

    You realise this is only because the Government is run by high profile business people who have claims in their own big interest agendas.

    Has anyone heard about Clive Palmer and what his plans are since the mining tax has been abolished?

    Piracy is killing Foxtel and the NBN will allow people to do that quicker and easier let's scrap that.... wait now legal services like Netflix are providing that then let's tax that then.

    If Gerry Harvey had any say in politics the tax on imported goods would of happened day one and then he would not be heard from again until election time (like most politicians).
    Its kinda pathetic really.

      Piracy isn't killing Foxtel, Netflix is.
      Gerry Harvey doesn't want a tax on imported goods, he just started doing grey market imports like everyone else.
      That's simply businesses adapting to a new environment. It's actually exactly what should be happening.

      If it's easier and cheaper for me to get a VPN, set up a US credit card, buy something overseas, pay for shipping than a local business, then that business is just not competing in the marketplace.
      It's not about jobs, it's not about supporting local business... it's about killing competition.
      If the cost of doing business in Australia is too high then companies need to do something about that.... Find new suppliers, renegotiate contracts etc...

      Australian businesses should be asking for cuts from the government to bring them in line with the rest of the world, rather than taxing the rest of the world to bring it in line with Australia.
      With the dollar settling again our export and economy should be picking up anyway.

      Foxtel is killing foxtel and I'm a foxtel customer.

      They could have overhauled that business years ago, but the management is useless.

      There is still a $10 tax on HD content (which should be the focal selling point of the product, not a reason to gouge customers), several shows are still delayed by YEARS (they only have themselves to blame for that), and HD should be available on go & play as well.

      Restaurants don't serve customers half the taste based on where they sit, and SVOD providers shouldn't be providing half the quality to those who can't (or don't want to) have sat/cable.

        Don't forget being the most expensive service while still having ads...

    You have to be joking!
    Right State revenue...? more like State pay rises!

    I'm of two minds about this... No-one likes a tax, but taxes contribute to paying for our infrastructure (Whether that actually happens in this instance is not my point).

    I have no problem paying an extra $1.20 for my Netflix account, it isn't going to break the bank.

    What I will have a problem with is if the Australian government go after services like Steam that already have inflated pricing in a different currency... I would only support a tax on Steam if prices were converted to AUD and the pricing was still fair...

    But hey, I will still also exercise my rights as a consumer to find the best bargain I can... If I happen to find bargains that dodge this tax so be it (Amazon, GMG, VPN's, etc)

      What I will have a problem with is if the Australian government go after services like Steam that already have inflated pricing in a different currency...

      The prices probably wouldn't go up, and they definitely wouldn't go up the full 10%. Odds are 10% would just go out of Valve's wallet and to the ATO, and only their accountants will notice the difference. Assuming they could ever make a system like this work all it would do is justify the current region based price differences.

      Personally I'm not that bothered by having to pay this fake GST on Netflix. In Australia goods and services are taxed. It's not ideal, no tax is, but it's how the system works. In theory I'm paying 10% on everything I buy here. I do my business' BAS junk every quarter and send them money (although I'd be tempted to relocate the business just to kill the annoyance of having to fill out the forms). Online services that technically operate within the country without actually operating inside the country have always been somewhat of a loophole.
      However all that said I think it's a ridiculous waste of time to even try to implement this scheme.

    One dollar more for Netflix is no biggie. Happy to pay it. Steam, meh. Still cheaper than buying from EB. Don't see what the issue is.

      The issue is not the tax (apart from the fact that it's expensive and difficult to enforce). The issue is we already pay much higher prices for most of our digital goods (steam being one of the worst culprits here). Adding a tax on top of the already inflated "Australia Tax" prices is just annoying. The government did a software pricing inquiry and found it was very bad.... they didn't do anything about it, and now are going to slap another tax on top of it.

      Second main thing is that it's basically unenforceable. They'll go after the big guys like Steam and Netflix but they have absolutely zero power over international businesses. They can't force some random website that sells e-greeting cards or some indie game developer that has a donate button to collect an extra tax.

      For a tax like this to be even remotely worth the effort, it has to be a proper tax applied to everything.
      Ultimately, stuff like this has been done before in other countries, and from what I've heard, it's never been overly successful. At the end of the day, the govt will get a few extra bucks and most of us won't notice the difference, but the bottom line is, there's other things that could be done to help local businesses.

    Is there any way to access Netflix in USA or UK (or wherever) without paying for a VPN service? In other words: FREE? And if so, can this be done through my Apple TV?

      You can use the Hola extension in chrome, it's free to use, and then airplay to the ATV. They also have an app that will install VPNs into your phone so you can airplay your phone to the ATV if you don't have a Mac. Or you could just plug your computer into your TV via HDMI and run it that way.

      Getflix is roughly $2.50 a month, and you get access to all Netflix regions.

    the people, yay we finally get netflix

    the gov, yay we finally get to tax netflix

    seriously though, the government claims over and over that they "get" that content piracy is a problem and that the best counter measure is good, cheap and legal avenues to get the content, yet they continually pump out crap like this, create "stick not carrot" laws like the anti-piracy crap, allow our big media companies to stifle competition and hold pointless show pony inquests into the Australia tax that result in precisely jack shit

    how about actually work at making good, cheap, legal avenues a reality instead you dinosaur rejects

    So does this also apply to Presto & Stan, or do they already pay GST?

      They already pay GST. That's why I don't have such a huge problem with this (if - and it's a big if - it doesn't cost more to collect than it raises). Netflix is directly competing with Australian providers who are effectively copping a reverse tariff of 10%.

        Ah right. I was going to say if they aren't then Netflix shouldn't be singled out. I don't have an issue with them having to pay GST since it's all a non-essential product etc.

          problem is, it's the big companies like netflix and steam that will get singled out. the govt can't enforce this to every single online store, it's just not possible.
          Once netflix get's taxed (that's if netflix agrees), then HBO will release it's streaming service and we'll be in the same situation. Or there will be some other new service next year that won't be taxed.... it's an ever expanding market, I can't see the tax collection side getting easier over time.

          Do we already pay GST on Google Play apps? I don't think so. How do you handle in-app purchases? it's all just too hard.

            Yeah this is possibly going to be more of a problem to enforce than the gov't may have first thought. Oh well, tax dollars at waste once again if it turns out to be so.

          I just checked my email....
          Receipt for the latest Hearthstone expansion.
          In App purchase via Paypal
          $31.99 AUD to Blizzard Entertainment
          (Includes GST of A$0.00)

          I dare say Blizzard will be another target for the government. EA and Ubisoft probably as well.

    I don't get some of the whinging. For companies that take money from Australians for an online service such as Netflix, why shouldnt they pay the GST?. They are providing a service to Australia, so tax it.

      You're missing the point. I don't think anyone is complaining about having to pay gst for Netflix. Well, okay, some people are, butt the problem is the government asking overseas companies to become tax collectors for them when they have no financial, legal or moral obligation to do so.

      * For some reason I misspelt butt...I mean but. What was I thinking?

        I agree with your points and your butts but I do feel like most of the people complaining are complaining because they might have to pay GST on a currently GST free service. I think most Australians are sort of oblivious to the fact they pay GST in their everyday lives so when a currently GST free service talks about switching we get dragged back into the same arguments people had when the GST was originally proposed.

        Butt, as Dogman points out below, if Netflix initially had the GST included in their pricing, no one would be whinging. Most people are oblivious that they already pay GST on most things.

      It's also a very expensive tax to collect. And who/how do they decide which online companies to pursue?
      This stuff has already been done in other countries. I haven't heard of it ever being overly successful.

      They've already said that taxing imports of anything under $1000 is just too expensive to be worth it...
      How is taxing a $0.99 app purchase going to be any different?

      As with most Australian Government ideas, the problem isn't the theory, it's the implementation.

    Take my Netflix money.... but stay the fuck away from Steam, you fat hairy douchebag.

    Last edited 11/05/15 4:41 pm

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