ARA Urges Support of GST Extension

By Sam Gopal | 20 Aug 2015

Retailers hope today’s meeting in Canberra will help create a level playing field with a reform of the GST threshold on overseas goods and services.

The Australian Retailers Association (ARA), has stressed the importance of State Treasurers’ agreement to an extension of the GST to include purchases from overseas online retailers under $1,000 when they meet in Canberra today. 

Russell Zimmerman, Executive Director of the ARA, says that while State Premiers came to an in principle agreement to lower the low value import threshold (LVIT) below the current $1,000 at the COAG meeting last month, State Treasurers must also support the move. 

“Extension of GST to international online purchases is crucial to the survival and growth of Australian retailers and the retail industry as a whole,” Zimmerman said. “This is about removing the anomaly and levelling the playing field for Australian-based retailers to ensure our local industry can thrive and compete effectively in what is now a global economy.” 

The ARA is encouraging government to drop the GST threshold on international purchases to zero. The introduction of this would provide a dual advantage, in that the funds raised will contribute to much needed services within Australia, as well as eliminating any advantages currently enjoyed by international businesses over Australian retailers. 

The changes to the GST rate on physically imported goods follow the introduction of the government’s so-called ‘Netflix tax‘ in its most recent federal budget, which under the draft changes, from 2017 foreign companies selling digital goods and services into Australia will be required to levy the 10 percent GST.

“The ‘Netflix tax’, which has introduced GST on the purchase of international digital products has already been approved, and we now need a similar requirement for hard goods. 

“The ARA considers the simplest method of collecting this sales tax is at the point of sale. Most international retailers already have mechanisms in place to be able to accept GST at the point of purchase, and we don’t envision that this would involve extra effort on their part, and will not incur any additional costs by the Government. 

“While the ARA welcomes this long overdue extension of the GST, it is critical that the process does not stall. The agreeance of State Premiers must also be backed up by State Treasurers tomorrow,” said Zimmerman.

With the changes covering goods and services including music and movie downloads, software and some online education courses, today’s outcome could see the government reap $350 million over four years.

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