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The Australian Online Tax Dream: A Level Playing Field
The Australian Federal Government must take action to slash the $1,000 Goods and Services Tax exemption for goods purchased overseas, according to a retail industry expert. Otherwise, local retailers face severe implications.
Retail industry bodies and experts are calling on the Australian Federal Government to step in and aid local retailers from the imminent GST loophole from overseas goods bought online.
Retail Directions‘ Managing Director Andrew Gorecki says Government action must be applied to online tax for Australian retailers to survive overseas activity.
“The retail sector is already under severe pressure from globally uncompetitive labour costs, overinflated rents, continually expanding legislation and depressed customer confidence. These factors alone should have scared the Government into action, before it is too late and permanent damage is inflicted on the industry. Instead, the opposite is happening and the industry is being put under more pressure,” he says.
“The retail industry must engage the public to remove this discriminatory impost on Australian retailers. The Government must remove it from the goods purchased over the internet in Australia. This would level the playing field, at least as far as the GST is concerned. The Government shouldn’t have a problem which such a change if their claims are true that the GST on online purchases is immaterial.”
The Australian National Retailers Association has commissioned an Ernst & Young report that looks at obtaining GST from registered overseas suppliers or local purchasers. A similar process takes place in the UK. The Financial Review reported today the report shows an extra billion dollars could be gained if the GST loophole is closed. According to the report, if the $1,000 GST threshold is lowered to $20, $997 million could go to state governments in 2014-15. This figure could grow to $1.64 billion by 2020-21, bringing in $47 million in ATO collection costs. The report will be released next week.
NSW Treasurer Mike Baird has also thrown his support behind lowering the GST threshold. Mr Baird will address Federal treasurers this week with his call to prioritise government action. This follows rejection from Federal Government last year to cut the threshold for international imports to $500.