$1000 GST-Free Threshold Abolished: Overseas Online Shopping To Become 10% More Expensive

A consensus between state and federal treasurers today during tax reform talks means that all purchases made overseas -- through popular online shopping websites like Amazon, Book Depository and NewEgg, as well as any traditional methods like mail order -- will incur a 10 per cent GST charge, abolishing the existing $1000 threshold.

Opinion: Australian Government's 'Parcel Tax' Won't Help Aussie Businesses Or Consumers

The Treasurer, Joe Hockey, says that the agreement means all overseas purchases will be taxed at the full 10 per cent GST rate, as of July 1, 2017. At the moment, no information on the enforcement or revenue collection of the GST component of overseas purchases is available; today's agreement is likely in principle rather than in any exhaustive detail.

Hockey said of the tax at a press conference this afternoon that it would level the playing field for retailers in Australia:

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.

A start date of almost two years from now gives both states and Federal Government time to design and implement a scheme. It is still unclear what costs would be sunk in creating a program to monitor the importation of goods from overseas, and how such a system would be enforced in contacting consumers and demanding payment of the tax once a parcel has reached the border and has been marked for the additional fee.

Hockey says that there's a lot of work to be done to implement the scheme, but adds that if the Government works out a way to implement the scheme earlier, it will be done. You heard right: the July 2017 date could be moved forward.

Meanwhile, Hockey added that taxation officials will travel around the world to get companies (like Amazon, Netflix, Facebook) to register for GST.

Hockey said that abolishing the GST-free threshold was the right way forward for the treatment of overseas purchases, rather than lowering it from $1000 to another arbitrary amount. The Productivity Commission had previously ruled that lowering it would cost more money to enforce than it would collect, which Hockey today slammed as a "ridiculous" suggestion. Basically, it's cheaper to just charge everyone than a select number of individuals.

Quoted in the meeting, federal treasurer Joe Hockey told the assembled state treasurers that "it won't be about policing the consumers, it will be about policing the vendors overseas" -- but those vendors will pass the costs directly on to consumers, whether through an additional fee at the checkout level or at the point of a parcel's entry into Australia in the case of less regulated international online stores such as eBay.



    And how will they enforce it if you buy something while overseas and then bring it back?

      It won't. The idea is to once again put the burden on the lower economic segments of society. The rich will still be able to fly off on shopping sprees, but those of us who can't afford it get walloped with the tax.

        Will not be surprised if you hear Hockey say something like "The poor don't shop online".

      I didn't see any talk of changing the tax-free threshold for incoming travellers.

      The real burden is at our borders for customs. They now have to invoice Australians for a pittance on each shipment into the country. If anything this is just going to cost more money than it generates. Top it off Hardley Normal prices are still not competitive including the 10%. For most electronic goods they are between 30-1000% more expensive

        I came here to say this too. Customs does no have the infrastructure or the man power to invoice every mail article that enters the country. It is simply a dumb idea that will cost more than it will save. The government should be pushing back on retailers to change with the times not the other way around.

          Time to order 100 $1 items via ebay from China.

          I've been saying this for years. The amount it may bring in will be well and truly cancelled out by the cost of policing it.

          Think of Netflix, the catalyst for this. There are roughly 2m accounts in Australia, each paying a tenner a month. Add GST, thats $2m per month being collected, be generous and call it $25m for the year.

          GST collects $60b, how is that going to significantly effect that bottom line? Add in that its currently based on a trust factor of Netflix doing the right thing, and what happens to all the other services that just say no?

          Ebay for example.

          Last edited 24/08/15 3:31 pm

            Netflix has an Australian franchise now so they will just pay tax as any other business. It's the international businesses which do not have an Australian business and do not charge GST which are the pain.

              Sorry, missed this, so hopefully you're still reading. You're right, but its not that simple. When you connect with Netflix, you're actually connecting to an overseas service, and paying (for arguments sake) Netflix Singapore, not Netflix Australia.

              So you ARE connecting to an international business thats not charging GST - Netflix Singapore. That separation becomes very important under GST law, and has been a pain for over 15 years now.

        so stage #2 of the plan will be to add a $10 'parcel levy' to make up for the shortfall. so that $2 part now costs $12 (& that's not including the GST).

          As soon as I read this, I felt defeated. I can see it already. That's definitely one of the ways they'd come up with 'fixing' it rather than just admitting a mistake.

          Personally I think they should work out a way to slowly remove GST from consumer products (level playing field for Australian business's and overseas companies), by increasing non-renewable export levies (used to fund renewable sources of income for Australia) and income TAX, hopefully that'll save Australian's millions in accounting fees and stop overuse of TAX deductions (don't blame people taking advantage of a broken system).

      usually u are asked to declare purchased goods whilst on holiday etc, that's what the UK did.

      Please help stop this government from ripping the Australian people from ripping us off. Tax for this tax for that tax tax tax tax im so sick to death of these people taking our money we never see anything in Australia except our people loosing our jobs to immergrants our company's are leaving we have no choice but to buy from over seas they do not buy anything for the Australians. So stop taxxxxxxxing us government. Your destroying the Australian people. Who voted liberals back in you should be ashamed for voting these corrupt government into power.

    So Amazon is going to get 10% more expensive, and the smaller online stores (the ones who aren't going to be 'policed') are going to be 10% more competitive. And where does eBay fit into this equation?

    Somehow I don't think the world's largest companies are going to be too happy about this.

    If the sentence “it won’t be about policing the consumers, it will be about policing the vendors overseas” hasn't been flipped by 2017, I will eat every pair of shoes that I own.

    Last edited 21/08/15 3:15 pm

      Have added a calendar reminder. See you in 2017 :)

      oh no the comanpies will be happy because they will just chuck another 10% on top the 10% they have already put on products but having been paying back to the government as tax

      I once consulted on a project for a startup in NYC. When it came to a discussion about relevance in international markets one well known personality had this to say about Australia: "There are more people in the greater Manhattan area then in the entire country of Australia. This should give you an idea of how companies set their priorities when it comes to customer acquisition in international markets."

      I am guess there will be a couple of companies that might bow to the GST requirements ... eg Amazon. I am also guessing Amazon will now setup a distribution centre in Australia because it has just become a viable option. They will drop shipping charges and expand their Amazon Prime program to Australia. This essentially will more than make up for any GST charges and we are back at square one.

        No foreign company will bow to the Australian government. It will be Australian Customs who will evaluate every import and apply GST accordingly. All this means is customs will hold all your goods until you pay 10% GST.

        Couldn't have said that better myself, Australian markets barely show up on balance sheets of most overseas business, we just don't have the population for them to even care. Most people simply forget how small Australia's commercially viable population actually is.

      I think that 10% increase is an understatement. Businesses will also incur a cost for gathering and managing GST payments and that will also be passed-on to customers. I believe that costs will increase well in excess of 10%.

      Last edited 24/08/15 11:16 am

    That's cute. Almost every package I've ever ordered from online comes already marked as "gift". They seem to do that so they can sell to the US/UK w/e without the recipient having to pay an import tax. If they're ALREADY doing that to sell to Australian customers, I don't see how the tax office can track it.

      Luckily, I have family back in the US. I just have things shipped to them free, I then send them some money to cover the shipping and they mark it as "Gift".

      If we follow the UK model that won't matter. I sent my brother a present and it was marked as a gift. It was valued at over 20 pounds so my brother got a letter demanding a vat payment before it was delivered.

        I was reading somewhere they are going to use the same system as GST here. minivercheevy's family would be a reseller in that case, so it would be a private sale, exempt from GST.

    Gerry Harvey reacts to today's GST news; http://38.media.tumblr.com/7357fb75f367c29dfc8154ceaeec6140/tumblr_mp62m8LQ9W1r4gei2o4_400.gif

      he didn't even have to read the news it was announced and that happened telepathically

      He probably doesn't care. He already grey imports stuff anyway

        I can imagine him now.

        Harvey: "Drop the GST! It's killing businesses like mine!"

        Assistant: "They plan to by 2017."

        Harvey: ".....Crap! Now I have to find something else to whine about!"

        So what is Gerry going to bang on about now to justify why he charges SOOO much more than the cost of buying from overseas - even now after 10% GST has been added ...

          Not to sound funny but I think he was just using it as free advertising and to try and get people into his shops via sympathy.

          But now that's gone, his advertising avenue is gone.

    I think 10% is going to be 15% sooner rather than later, if the State pollies get their way!

      I'd be happy with that if they cleaned up the tax system properly and just slapped a flat 15% on everything you buy.

        But what about periods?

        And why should I have to pay for toilet paper too?

          Your tampons will cost you an extra 76 cents, hardly bank breaking stuff.

          I'd prefer to have a flat rate of GST than having to work for Joe every Monday.

    Avoid the tax, sign up for international mailbox and credit card?

      This^. I was just wondering the same thing.

        It won't make a difference, the tax will be applied by Australian customs at the border. They will hold your goods until you pay the 10% tax

          What he said. Customs will blackmail you for the tax and dont forget any "administration" costs..

          Last edited 27/08/15 9:55 am

          There is actually a way around that:

          Use this package forwarding company https://www.viabox.com, to get a mailbox in the USA, then have them forward your purchases to Australia.

          Viabox allows you to edit your items value, before forwarding from USA to Australia, and voila!... You'll have less taxes, if any, to pay to Australian customs.

    "Meanwhile, Hockey added that taxation officials will travel around the world to get companies (like Amazon, Netflix, Facebook) to register for GST."
    aka Sure, we'll tax people for things people buy over the internet, but asking them to implement it? That just HAS to be done in person!

      Those discussions would need to be done in person. It would be a negotiation as realistically companies overseas dont have to adhere to it, but our government will make sure its hard for them to sell here if they don't.

      So they want Netflix US to register for GST for Australians who are using fake US billing addresses, when they're already in Australia charging Australians GST? Stupidest thing I've ever heard. If they're forced to go by credit card location, that'll be the last straw in banning aussies from the US service.

        Pretty sure the AUS netflix is not charging GST. Hence the incoming Netflix Tax.

        What about those using PayPal to pay? How does that factor in?

        Netflix taxed will still be a tenth of the price of subscription television over here tho...

      Australian politicians needs to do a reality check. Why would international companies really care that much about Australia. 360+ million people in the US vs 23 million in Australia. 400+ million people in Europe vs 23 million in Australia. Yup, companies are really going to listen to Hockey.

      These guys are delusional.

    "Meanwhile, Hockey added that taxation officials will travel around the world to get companies (like Amazon, Netflix, Facebook) to register for GST." - wait wait wait... Are you saying that we're going to have to pay for their round-the-world trip just so that they can tax us more....?

      I for one don't mind paying to send our current administration around the world...
      Bringing them back however is an entirely different matter!

      No travel by helicopter, first class nor use of limousines. Promise.

    Great. Excellent. Wonderful. No mention of how this f*cking crap is actually going to work in practice, just that they're going to make it happen.

    So once again, Australian consumers get f*cked up the a*se for the benefit of retailers. Good f*cking grief.

    Also, the title's a bit inaccurate, since we know that we'll be slugged with the collection fees as well. I think something like "$1000 GST-Free Threshold Abolished: Overseas Online Shopping To Become 60%+ More Expensive" is probably more accurate.

    Last edited 21/08/15 4:19 pm

      so that $2 part we need for a project (& can't source from australia) will suddenly cost $22, once the 'collection fee' is also applied.. & that's not including the 2 extra weeks we have to wait for the part to clear customs.

      'smart country'? not anymore.

        As mentioned elsewhere, everyone should but 10x$1 items from Hong Kong and then NOT pick them up.. Keep this up, occasionally, for long enough to cause customs a major headache

    Good. This will expose our local retailers as the gougers that they are.

    I will gladly pay the 10% GST and still save hats full of cash on my overseas purchases.

    Retail in Australia is a joke.

      Correction: Australian distributors are the gougers. Small business gets just as fucked by them as the customers do.

    So, they expect several hundred million in income yet it'll take approx $1.5b to administer...... pure genius, no wonder the economy is in the toilet

      It's the old kick up dust to try and trick everyone into thinking something is happening when it's not routine.

      Hockey has been quoted as saying that the "1.5b to administer" isn't "an issue" anymore. Or at least as big of one.

      From that I read, "we will force online retailers to tax shipments to Australia for us, then pass on the tax revenue".

      The government will probably have to pay those companies some form of payment to implement the code changes, but it would be a 1 off change and not require ongoing handling.

      Then, all other packages come through and thinking that they already have the biggest fish, they either just let them in, with perhaps random inspections (thus keeping the costs to enforce down) or if there is some kind of marker on packages that have had GST paid and all other packages get manually processed.

      This would still cost quite a fair bit I would imagine as there is no way they could track every single online store and force them to implement, unless they do it via Visa/Mastercard/PayPal etc...

        I really want to see how they will "force online retailers" to do that. Is Hockey going to stand over them in another country with a cricket bat?

          Yeah, perhaps "force" is too strong but this is all political and Im sure they can lean on their US buddies to make this happen.

          Even though we have quite a small population, relatively speaking, I would imagine companies like Amazon would rather comply than just cut Australia out of their revenue base. Several million+ a year is still several million+ a year.

          Not to mention, Amazon, Google, Blah-Blah, already have offices and presence in Australia. I pay GST on my AWS account already so this isn't going to be very difficult to implement on the surface.

          Perhaps tracking the GST from their multiple regions (.co.uk, .fr, .gr, .jp etc) that has been collected might be more difficult, but then they'll just funnel that to Ireland or somewhere and claim they didn't collect any at all :)

        The gov won't pay these companies to make these changes. They will probably tell them it will make it easier for their customers to get their products and is worth doing.

        Also, if they have some marker on packages - how long until China starts pumping them out? haha.

          I disagree (with the payment thing).

          If I ran online retailer "x" and I was approached by a government to implement a tax, then I would charge them the change request it will take to implement. It could be simple code, or complex. Then there would be some kind of transaction fee for paying the tax to the government in question, forex fees, etc.

          The government has stated they found a way to reduce the fiscal impact on collecting the tax but there would still be some cost to bear to set it up.

          I didn't say the marker was a great idea, but there would need to be some kind of external evidence (like an invoice) attached to identify if the tax was already collected. Something like a marker/QR code etc would mean machines can process packages that have/have not had tax paid.

          Of course every system is open for exploit, so irrespective, it would be a matter of time before there was a way around it.

          Last edited 24/08/15 2:55 pm

            So when the government says my car is unroadworthy I can just invoice them for the cost of repairs?

            You can't just charge a government for the cost of complying with the law.

        "unless they do it via Visa/Mastercard/PayPal etc..."

        Exactly this. Do a deal with the cards and give them 1 or 2% to administer it. That is the only way I see it working. Yes there are workarounds, but you would catch the majority by grabbing visa, mastercard and paypal without going any further than that.

    This will deliver competitive neutrality for Australian businesses, and ensure fair and equal treatment of goods and services.

    Yeap, in terms of taxation it will bring neutrality.

    But cost, selection and fair customer service will continue to be poor thus in cases where even if shopping online is more expensive people will do so to spite the local retailers and both sides of politics for once again ignoring Australians.

    Seriously, even if you take the worse case example from Choice, it's still freaking cheaper than buying local!

    Last edited 21/08/15 4:18 pm

      Example of my own experience: running shoes, aus price, $270 - US price $120 aud delivered.... How is GST the thing killing australian retail again?

        It isn't. Even it the lack of GST wasn't an issue there are still two others that drove people to online shopping: availability and good customer service.

        Call be crazy but if I can have at least the last point (good service) I'm more than happy to pay more locally if the same item I'm after is present.

        If not, then serves said business right if it goes bust.

    Ive made this comment before but if this GST implementation is carried out by the Australian Government negotiating with companies with sizeable online presence (such as Amazon, Apple, Google, eBay, etc) to implement the tax into their cart system and it wipes out any handling and other fees then I have zero problem with this, provided it is GST, i.e. 10%.

    The Amazons of the world already have tax handing in their cart systems anyway, they would just add in the code when you are shipping to Aus.

    I would imagine it then plays out like this.

    A parcel that has already had the tax collected from Amazon etc, is marked as so and therefore requires no manual processing when it arrives. A parcel that was bought from niche website "X" doesn't have this mark, therefore it either gets through un-taxed or is manually processed. If manually processed it will probably incur the other fees and make the online playing field 10% GST or higher based on who you bought it from.

    I think it will be interesting if you are buying a random used item from another seller on eBay, if you'd still have to pay the tax. I guess tax has never been paid on the item in Australia so why would there be a difference.

    Its a very interesting topic.

    Last edited 21/08/15 4:15 pm

      And one of the principles of a GST is that the tax is only levied on the DIFFERENCE between selling and buying price for secondhand goods. You don't pay 10% tax on a $25,000 s/h car - if the dealer bought it for $20,000 you (the purchaser) pay GST on the $5,000 difference. So now please explain, Mr-clever-clogs Hockey how that will work for purchases from ebay?

        Um you may need to review the intricacies of GST

        Your calculation only works if the car was purchased by the dealer from a private owner who is not registered for GST, fleet vehicles will have more complicated accounting, with GST up to of 1/11 of the sale price. Businesses claim an input credit and apply GST to the total amount (less any GST exempt value).

          While you are correct with regard to new purchases, he's talking explicitly about second-hand goods, where the rules are a bit different (and where capital gains tax may apply).

          Generally, for private sales of second-hand goods, GST isn't payable at all. I suspect things are a bit murkier when one party is a company...

      When this goes through I'm going to buy $500 worth of $0.02 items on ebay (with free shipping) and enjoy the suffering it's going to cost someone to manually process it all.
      And then if they want me to pay for it... I won't. Take more effort to send it back or destroy it.

    Simply to please the likes of Harvey Norman, a big backer of the Liberal Party, rather than raise any real revenue.
    The cost to collect GST on small purchases far outweighs the revenue raised.
    In other words, taxpayers paying to create a monopoly for businesses like Harvey Norman.

    Meanwhile, Hockey added that taxation officials will travel around the world to get companies (like Amazon, Netflix, Facebook) to register for GST.

    Pick up the damn phone, or use the internet, you technologically retarded numpties.
    Stop wasting tax payers money like you're entitled to it.

      Yeah I wonder how much tax they have to collect to offset the travel and implementation costs

      Internet is too slow, they fucked that already

      It means they can have a nice little holiday, but it will pass Joe's sniff test on legitimate use of public money for overseas travel as it will be for "business".

    Still cheaper than to buy here. Give or take exchange rates.

      Even if it isn't, it is a sure bet people will still import out of spite.

      Seriously, raise your hand those who will keep shopping online even if it costs more than local?

      *Raises own hand.*

        *Raises own hand*

        That being said, I mostly import CD's and Vinyl and even with the tax, 99% of what I buy isn't available here so it would have to be ordered anyway.

        That's irrational at best.

          My asking forum goers to raise their hands or keeping to principle?

          If the latter, how so if I may ask?

          It goes without saying that is something I'm after is too expensive then naturally I'll go without rather than support local retail that has grown fat on contempt and now sees access to my wallet as a expected right.

        Hear, hear! Retailers have shown nothing but contempt for Aussie customers and now they're being rewarded for it. I for one will not put up with it.

        I will, I've had items from the US and japan arrive before others ive purchased from melbourne when shipped on the same day
        At the moment its cheaper and faster to buy overseas than within australia, 10% is still much cheaper in many cases

        I've always imported mostly because Australia is still either late or never gets some of the more niche titles I want.

    But it won't just be an added 10% or whatever the rate is at the time. There will also be an 'administrative' fee that is added to collect the tax. This could easily be $25.00 which means that small item like a TV cable from China that you paid $3.00 for will become $3.30 PLUS the $25.00 admin fee. Don't believe me? Just look at other countries where this is done - eg the UK. No wonder they set a threshold value! What a crock!

    What happens with secondhand goods?
    Maybe another loophole to use..

    Last edited 21/08/15 4:29 pm

    no they have to fly around the world to spend enough money to justify it (enough being more than they will make)

    I honestly don't mind paying an extra 3 cents on my dealextreme purchases, but if they think they're charging me $20 to collect that I'll just start ordering duplicates in hope something will slip in and leave them with the expense of returning the things I refuse to pay for/

    What's Labor's policy on this?
    Maybe they'll scrap it WHEN they get back in..

      They won't say no to new tax income, and they'll get the extra bonus of getting to blame the previous government for it.

      Politically it's win-win.

    How about they get big corporations to pay the correct business tax on their Australian sales instead of annoying us even more. When's the next election? Looks like we'll have to put up with a term or two of labor for a while.

    Another issue that will crop up is the European agenda for VAT taxation at the point of consumption which will catch us if we sell goods and services overseas. Increasingly other countries are moving towards the concept of requiring value-added taxes to be levied at the point of consumption. Here, we will end up having to create more paperwork for small business to deal with if they wish to export goods and even require us to register with various taxation authorities to be compliant.

    I think we should adopt a new name for this. Let's call it 'The GerryPander'.

      I like it! Such a good play on gerrymandering. 'Gerrypandering'....This term needs to be spread far and wide.

    Ummm...this is the same Treasurer who has been telling us that big multinationals like Google and Apple aren't paying their fair share of Aussie Taxes? What makes him think that they will now suddenly add to their own administration costs just to comply with with our piddling little market?

    Within Australia the system works because vendors and wholesalers etc have accepted the administrative burden of keeping track of GST - because they in turn can claim back the GST they pay out.
    eg - I buy an item for $11 ($1 gst) , sell it for $22 ($2 gst). The ATO doesn't get that $2, because I claim the $1 I have already paid in gst as a refund...so I get something for my admin trouble, and the ATO get to have a cheap tax collector.

    But companies outside Australia don't pay GST, and thus don't get the "refund". So they will have to either swallow larger admin costs or add another "fee"....or thumb their nose at the ATO.

    How exactly does he propose to get them to process and forward payment of GST for online only purchases? eg a service delivered over the internet from overseas.

    Is he proposing to employ an entire new army of public servants to process all the incoming parcels? What are they going to do - store the parcel until the GST is paid? Send a GST bill with the parcel?

    I recently bought something from ebay that cost about $3.50 with free postage from China. The GST on that would be 35 cents... the cost of sending me a bill in the mail would eat that up.

      "the cost of sending me a bill in the mail would eat that up."

      Exactly - which is why there will be an "administrative fee" added to the tax collection. Rumoured to be about $25.00. Don't believe this? Look how it is done in other countries with a VAT / GST. So that $3.50 item won't be $3.85 - it will be $28.35. But of course, that's what Gerry 'Hardly Normal' probably charges for the item anyway, so Hockey's right - it will certainly even the playing field! For him. Stuff the consumer.......

      Companies like UPS already collect GST for items over $1000. They charge the customer a $50 admin fee for that. Not sure how this will work for small purchases though. I am guessing there will be a huge grey area and indeed there will a massive army of new public servants employed just to police the system.

      My wild guess is this is a half baked policy that a bunch of beurocrats came up with sitting in a meeting room that have never in their live actually worked in a real company or have any idea how business processes in real companies work.

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