The Government Is Clueless About eBay And Online Retail

eBay is threatening to block overseas resellers from Australian eBay customers rather than face the hassle of collecting GST. Amazon has made similar statements as well.

This would be a very poor outcome for customers -- but probably one that would make Gerry Harvey smile from ear to ear.

The Background

A few years ago, after much whining and hand-wringing by olde worlde retailers, the Australian federal government began looking into changing the law around GST collection from overseas retailers on purchases of under $1000.

Even though it would cost more to collect the GST than the tax would raise the government wants to kick start this exciting new initiative (not) on 1 July 2017. But the impact could suck big time as eBay suggests they might block overseas retailers from their marketplace.

Here's how I see the government's GST collection proposal. I'm a Melbourne boy. One of our local institutions is the Victoria Market. Stall holders rent space in the market and sell their wares - anything from fresh fruit and veggies, to sides of beef, to clothes to phone cases. The stall holders are responsible for managing their own tax affairs - like filling in a BAS and paying GST (assuming they have more than $75000 revenue and are obligated to do so).

eBay is like the Victoria Market. It's a marketplace that charges rent, in the form of a cut of all transactions, for resellers to peddle their wares.

But the government seems to think eBay is a retailer and they should be collecting GST and filing a BAS each month or quarter, for the sales made by stall holders. This is covered in an explanatory memorandum that states

This measure imposes some transitional and ongoing compliance costs upon suppliers (principally those operating outside of Australia), redeliverers and electronic distribution platforms for supplies of low value goods that are purchased by consumers and are delivered to Australia.

The key words are "electronic distribution platforms". eBay, as an electronic distribution platform would be obligated to collect GST on low value transactions.

So, what's eBay's response to this. Simply, they said they'll pack their tent up and leave. They will block overseas resellers from Australian eBay customers rather than face the hassle of collecting GST for overseas resellers. Amazon has made similar statements as well.

I understand how companies that operate an online store that sells directly to customers should be required to collect GST and fulfil local tax obligations. But surely it's up to sellers to collect GST. Of course, by treating all eBay resellers as a collective, the $75000 threshhold of registering for GST is easily reached whereas small resellers probably wouldn't qualify.

In my view, the government's decision to compel overseas retailers who have a direct retail presence in Australia is reasonable. It's hard to justify selling products and services to Australian customers but not paying local tax. However, forcing platform providers like eBay to collect GST makes little sense. Sure, eBay ought to pay tax on its Australian income but I don't think they should be covering the GST obligations of online traders.

This article originally appeared on Lifehacker Australia.


Comments

    It never fails to amaze me how stupid Australian politicians can be. They've completely wrecked Australia yet we insist on voting them in. I don't know who's the most stupid, us or them.

      We are much more stupid. Politicians are happily making a killing, negative gearing properties and stashing the money away offshore. Where as us, lapping up Murdoch's racist scare mongering, keep voting them in.

        Majority of negative gearing is done by mum and dad property investors.

          Sorry G-Man you've fallen for the Pollies lies. The top 10% of income earners get over half the benefit:
          http://www.abc.net.au/news/2016-05-10/explainer-negative-gearing/7402442

          This also means a pattern something like the top 20% of earners will get over 2/3rds the benefit, the top 30% get 3/4, and so on.

          So while so Mum's and Dad's do benefit, they are not the big numbers. The real issue is Pollies who earn lots and jointly have many properties have every incentive NOT to change things. Hence the claim to look after Mum's & Dad's.

    I think we need a major tax system overhaul to reflect the current way of buying things.

    Huge companies like Apple, Uber and EBay use various strategies to maximise their profits and minimize their taxes meaning they aren't paying their fair share and we're left to foot the bill.

      I think we need a major tax system overhaul to reflect the current way of buying things.

      That is what is needed and even has been called for but both sides are too happy to wring their hands and make token gestures rather than get their hands dirty and do something about the matter.

    Should be able to bypass very easily with a vpn. Surely they won't impose get on gifts received from overseas

      All well and good with VPN but it won't work if the ebay sellers will not ship to Australia. Then you going have to use a drop ship service which adds to the cost

        Still cheaper than local. And even if more expensive, there is still the availability issue which is driving online sales.

        bought a nvidia gtx1080 shortly after launch last year from newegg global...it came from the states...was close to 300$ less than Australian retail after shipping...

        unless you are buying bulky items that have large international shipping costs the 30% australia tax will always outweigh purchasing from overseas sellers....

        only drawback is warranty but at least for tech, many companies now offer international warranties or have no issue with people posting back to their base of operations even if its from overseas.

    How appalling that here we are, yet again having to discuss something because old dinosaur businesses want to keep their 300% and larger markups, without compromise. And we'll actually help them to do so by introducing reforms that cost the Australian people money instead of making it.

    I wouldn't blame eBay for packing up their stuff and leaving, developing, implementing and maintaining software of such a caliber would outweigh what they make from fees.

    How about we get our national tax system sorted?
    If the big companies selling in Australia paid their fair share of tax that's owed, we wouldn't be scrambling to raise taxes for all the little people.

    Wait, ebay is taking a cut of every transaction. They asking not for them to collect GST from individual transactions but to pay GST on the cuts they take for money earned from Australians?

      No, they are asking for both. It's the government, they want it all.

    When half of Australians pay no net tax I love the blame big business and politicians.
    I agree with the sentiments of some others here, the entire system needs an overhaul.

      "When half of Australians pay no net tax"
      Exactly gman.

        "When half of Australians pay no net tax"

        Most of that half barely make enough to pay tax. Most of that half struggle day to day to even pay bills. Meanwhile the government wants to reduce penalty rates and hand big buisness tax cuts.

        Forcing the already stuggling middle and lower class to pay more tax will create more problems than it solves.

        Last edited 24/04/17 1:12 am

          Yeah joint income 100k 2 kids no net tax. Yeah real struggle town, not saying it's easy but it's their decision stop making others pay for it.

          Reducing penalty rates would in turn make things cheaper for the consumer through lower wage coatings helping lower income earners. It only effects specific industries.

            If you think buisnesses will lower their prices due to the reduction in penalty rates you are deluded. No buisness would give up the extra profit they can make now at the expense of their workers.

    So to collect the alleged $300m in lost GST, our government is ensuring Ebay will close international business with Australia, along with many other international retailers, which will also include Amazon, but only for the short term interim (about a year). Why would international retailers rush to comply when they have 100's of millions of other customers around the world? We are but a very tiny fraction of these retailers' business revenue.

    The funny thing is when Amazon do set up here inside the next year, as they have done in every other market, they will undercut local retailers even with the GST added! The current approach gives Amazon a Federal handout in the form of legalised restriction in the trade of their international competition, which means Amazon only need to target local retailers. Talk about shooting fish in a barrel!

    This action also takes away consumer choice as I will pretty much only be able to buy local or from Amazon, compared to the wider full international choice of today.

    This legislation is quite pro-Amazon, will drive more 457 visa abuse among local retailers, and piss off the buying (and voting) public as can be seen by these comments.

    I have no problem paying GST, but I do have a major objection to restrictive trade, an unnecessarily restrictive and costly collection system, and the loss of my purchasing choice.

Join the discussion!

Trending Stories Right Now