GST On Overseas Online Purchases

[glend (Glen)]

I see in several news stories today that Joe Hockey and the various state/territory treasurers have now agreed on the implementation of the GST on overseas purchases of less than $1000 AUD. The collection and compliance is clearly a problem (in the too hard basket locally) and it seems that they are counting on overseas suppliers registering for the Australian GST through the existing GST registration process. Hockey said that ATO officers would be visiting overseas suppliers like Amazon to inform them of the requirement and get them signed up for the GST. The problem for the Feds is that they have no compliance mechanism for those that do not register for the GST and no ability to force them to do so. Hockey admits that trying to police it via Australia Post, Customs, etc would be incredibly labour intensive and costly, thus they want the overseas retailers to 'sign up' as GST collectors and remit the funds to the ATO - good luck with that. He might be well advised to get the ATO to talk to the Euro VAT people about how they force compliance.
What is the incentive for small astro retailers, who do some business with Australians for things like EPs, adaptors, and other sub-$1000 AUD purchases, to voluntarily enrole as GST collectors? The ATO can't possibly identify and visit all of them, and then there it is strictly voluntary as to whether they register for GST. Perhaps if the US Internal Revenue Service advises all of the registered businesses in the US that this is now a requirement they might get somewhere. However, in Australia, retailers are not required to register for the GST unless they turnover +$75000 pa. How many overseas retailers are doing that sort of volume and even know if they do. I believe that there will be gapping holes in this collection regime. Sure it's probably easy to get Amazon to comply, but little guys like Unihedron, Kendricks, maybe Agena Astro, what's the stick that is going to push this compliance work onto them?

Also, it's appears settled that it will be a July 2017 start, so people will be burning the internet up prior to that with purchases.

[bojan]

Maybe Paypal will comply?

[Shiraz (Ray)]

what is likely to happen is that many OS suppliers will simply take Australia off the list of countries that they will supply to. Then the new agreement will become what it is really intended to be - a mechanism to stop OS purchases and give control back to Australian retailers.

Seem like the global economy is OK when it allows the big end of town to choose to be taxed wherever the rate is lowest, but not OK when us plebs want to get the best deal we can.

[glend (Glen)]

Originally Posted by bojan

Maybe Paypal will comply?

Paypal is not a retailer, they simply supply a payment system. VISA etc are in the same category. The GST system is based on retailer compliance through their activity based reporting relationship with the ATO, and the regular GST remittance cycle.

[bojan]

Originally Posted by glend

Paypal is not a retailer, they simply supply a payment system. VISA etc are in the same category. The GST system is based on retailer compliance through their relationship with the ATO, and the regular GST remittance cycle.

Yes, I know, but the most effective way to tap into money flow is via payment system.
I bet Joe & Co are considering exactly that...

[LewisM]

FREAKING FANTASTIC! My sideline business RELIES on cheaper overseas importation of parts and items NOT available here at all. This will now make my business essentially dead in the water, as my prices won't be able to undercut the competition any more.

Another watermark screw up for an already totally inept government.

[julianh72 (Julian)]

Originally Posted by bojan

Yes, I know, but the most effective way to tap into money flow is via payment system.
I bet Joe & Co are considering exactly that...

If it works in America and Europe, where vendors / retailers (including eBay and Amazon) and financial houses (including PayPal, Visa, MasterCard, etc) collect the GST / VAT / State Tax / etc applicable in the country / state of purchase, then I can't see any fundamental reason why they couldn't be brought on-board to apply GST on Australian purchases too.

[julianh72 (Julian)]

Originally Posted by LewisM

FREAKING FANTASTIC! My sideline business RELIES on cheaper overseas importation of parts and items NOT available here at all. This will now make my business essentially dead in the water, as my prices won't be able to undercut the competition any more.

Another watermark screw up for an already totally inept government.

Does your "sideline business" charge GST? If it does, you'll be able to claim it back on overseas purchases for resale; if not - well, you're exactly the sort of business that they're going after, I'm afraid!

[AndrewJ]

the most effective way to tap into money flow is via payment system.

I reckon that hitting the payment system is the easiest way to go as well, and as a further extension, to make it even simpler, ALL goods from overseas get hit with the GST, so the O/S retailers payment systems dont have to pick and choose. If geoblocking on the net is as simple as it is ( to implement and get around ), im sure a std GST could be added based on country of purchase/delivery. Random checking ( with big fines ) at this end would then provide a limited deterrent to getting around it. ie if you can be fined several hundred dollars for not having a $5 train ticket in melb, a several thousand dollar fine for tax evasion would easily fund the checking :-)

Its then up to the purchaser here to go and claim it back if they think they shouldnt pay.
Thats ( partially ) how it worked in Germany when i was there.
Even if you had a passport and or ticket as proof of non residency, you had to pay the VAT and could only claim it back on leaving, once ypou got past customs.

Andrew

[N1 (Mirko)]

Ultimately responsibility could lie with the end customer, in a similar way that you the end customer are required to declare stuff at the border. Sufficiently high fines will ensure (most) people comply.

Originally Posted by LewisM

FREAKING FANTASTIC! My sideline business RELIES on cheaper overseas importation of parts and items NOT available here at all.

Lewis, if you don't mind me asking - cheaper compared to what? Can't be local suppliers because the product isn't available here.
Registering for GST might indeed be the way to go here, assuming the size of the business is worth the extra bureaucracy.

[gregbradley]

How would it work for those many Hong Kong suppliers who already state in their ebay ads that GST may or may not be collected even on items over $1000?

This whole thing is really politically driven and surely not a real attempt to increase revenue. The cost of collection was deemed to high way back when the GST was first introduced. Surely that cost in 2015 has only increased a lot. So its a loss making plan whilst seeming to increase revenue for the States? Is it a backdoor way of giving the States more money without having to say you are giving them money from the Federal Budget? Who pays for the increased costs of collection - the Federal Govt?

Seems like sleight of hand to me.

Greg.

[dannat (Daniel)]

greg apparently the cost of collection was way overstated, it will be done mostly electronically with little human input -seems they think they'll be close to $1Bn better off

[The Mekon (John Briggs)]

Never been able to understand the claim that collection costs would outweigh revenue. Prior to GST you took a chance on whether the goods would get past the post office without import taxes. I recall in 1993 I ordered a 2" prism diagonal from University Optics. The value stated was $360. (yes, astro gear was expensive back then) Before I could collect it I had to fork out $80 to cover the 22% sales tax in place at that time. You lot don't know how good you have had it for the last few years.

[LewisM]

Originally Posted by N1

Lewis, if you don't mind me asking - cheaper compared to what? Can't be local suppliers because the product isn't available here.
Registering for GST might indeed be the way to go here, assuming the size of the business is worth the extra bureaucracy.

The way it works is I quote to source and import certain restricted items (I obtain Governor General approval for most of these items). I undercut similar businesses doing this, who charge SIGNIFICANTLY more, and have the audacity to imply that importation and documentation is difficult - IT IS NOT - it is SIMPLE and charge more to do this (when you see telescope importers claiming the importation documentation is difficult and expensive, LAUGH at them, because it is NOT!!! It is NO excuse to charge people more, and you CAN do it yourself, easily).

My most recent purchase was $68 AUD worth of parts from Greece. There are 10 pieces per package, so $6.80 each. I resale at $10 each. The competition - IF they will import it for you - charge $45 to $65 per piece!

[julianh72 (Julian)]

Originally Posted by LewisM

My most recent purchase was $68 AUD worth of parts from Greece. There are 10 pieces per package, so $6.80 each. I resale at $10 each. The competition - IF they will import it for you - charge $45 to $65 per piece!

I can't see how GST would kill your business then - you can easily add 10% to your price, and still massively undercut the competition.

[Starless (Brian)]

They let multinational companies send billions of $ profit,
from doing business in Australia, offshore and pay no tax
on it so the treasurer decides to try and increase the
politicians travel funds by trying to gather money from
the little guys, the honest tax paying citizens.

Why am I not surprised.

[pluto (Hugh)]

From what I understand they're basically asking foreign companies, with a turnover of over $75k, to voluntarily register for, and collect, GST. Like what some companies do already, notably Apple.
In this article it mentions that they anticipate getting hundreds of the largest companies on board. That article also mentions that they won't be checking packages so it sounds like your average small/medium foreign business that ships to Australia can pretty much ignore the GST. And good luck getting every foreign eBay seller signed up!

TLDR: your iTunes/Google/Netflix/Amazon purchases will have GST, but that's about it...

[julianh72 (Julian)]

Originally Posted by Starless

They let multinational companies send billions of $ profit,
from doing business in Australia, offshore and pay no tax
on it so the treasurer decides to try and increase the
politicians travel funds by trying to gather money from
the little guys, the honest tax paying citizens.

They're going after both the tangible (physical goods) markets (eBay, Amazon etc) and the intangible "services" markets (Netflix, Google Play, iPhone App Store etc):

Australian online shoppers and Netflix to be fully taxed in 2017
Goods and Services tax exemptions to be removed
http://www.theregister.co.uk/2015/08...taxed_in_2017/

[glend (Glen)]

Originally Posted by pluto

From what I understand they're basically asking foreign companies, with a turnover of over $75k, to voluntarily register for, and collect, GST. Like what some companies do already, notably Apple.
In this article it mentions that they anticipate getting hundreds of the largest companies on board. That article also mentions that they won't be checking packages so it sounds like your average small/medium foreign business that ships to Australia can pretty much ignore the GST. And good luck getting every foreign eBay seller signed up!

TLDR: your iTunes/Google/Netflix/Amazon purchases will have GST, but that's about it...

Yes that's the way I understand it will be..

[JB80 (Jarrod)]

Why would companies voluntarily register to do something that they don't bother doing now just to please the ATO?
What I mean is nobody from the US or Asia collect the associated VAT we pay in Europe, this is done by the shipping company or post office who will pay customs on arrival but you then will need to pay it upon receipt of the package.
It is a rather simple idea really.