Importing goods about to get more painful

[billdan]

If 0.73 cents to the US$ wasn't bad enough, now the Aust Govt is going to drop the GST free threshold from $1000 to probably $20.

http://www.abc.net.au/news/2015-07-24/gst-threshold-for-online-shoppers-could-fall-to-20-dollars/6645012


So if you are contemplating importing anything of value get in quick. Knowing the Govt's track record, they will probably back date the change as well.

Regards

Bill

[glend]

I would like to know how they can inforce that on foreign retailers. The retailers overseas are not going to collect and remit GST to the ATO. As someone who has run a business here and had to submit GST quarterly, I know the present system cannot be used to collect from them. They might have to put it on the banks and credit card companies and they will charge a fee for that. As many have pointed out previously, the cost to administer it will be more than collected.

[Steffen]

Yes, but arithmetic isn't exactly the strong suit of the amateurs in charge, is it? If anything, this will further blow out the budget.

[rat156]

What they'll do is simply extend the current system. The package will be held at the distribution centre, you will be sent a letter requesting payment. Until the payment is received, the goods will not come out of customs.



The question is what will the above process cost. If a human is involved in sending out GST invoices, then the cost per transaction would probably be in the order of $10, so anything over $100 will be cost effective for the government. Of course if the human is out of the loop the system will pay for itself within a day or so.

In this day and age of electronic overseas purchases, it wouldn't be that hard to include a GST on electronic purchases for the big retailers (EBay etc), for everyone else, who we are more likely to deal with, then, if you want your item, there would be an online system for importing goods into the country.

The big question is ...
Does it really make that much difference?

The most it's going to cost any of us in one transaction is $99.90. If the item is so much cheaper OS, then the added $100 isn't going to make a difference, if it makes it more viable to use a local retailer, then they win as well.

This government is probably pandering to the big end of town, but the alternative governments in each State are also arguing for it, so it probably makes some sense for everyone.

The times it will hurt is when you've got no choice but to go overseas for the item, then it's a 10% tax, straight out, no job protection. Particularly for second-hand goods.

Maybe we should call it a "Great Big Tax on Everything... Under $1000"?

Cheers
Stuart

[Camelopardalis]

It was inevitable unfortunately.

The UK does a similar thing on anything valued over £18, only they charge you duty first (depending on the category of item) and then VAT==GST at 20% on top of that, including shipping costs! Then they add their "handling fee" which is anything between £8 and £20 depending on carrier.

Due to the volume of mail there though, not every package gets caught and some proportion slip through uncharged. Given that Aus Post has been complaining of declining revenue, etc I can see this as a natural occupation/money spinner for them...

[PCH]

It makes me puke. On the one hand that we do need more revenue to run the country -I get that. And undesirable though it may be for us individually, it makes sense to make gst more widespread or raise it on the existing range of items and services subject to gst, or both.

But then the likes of Bronwyn Bishop, and probably many more pollies too, unapologetically spend money like it's going out of fashion on their ego driven executive modes of travel. 5 grand for a helicopter flight, 1000 bucks a day for limos on a taxpayer funded holiday. They should be dragged across broken glass!

Incidentally, Amazon now charges VAT for sales to UK and European buyers of downloadable books. So I'm guessing the mechanism is in place for them to remit the moolah to the relevant tax authorities.

Just my 2c :)

[Renato1]

One of the many who recently pointed this out was former Treasurer Peter Costello last year on "The Bolt Report", in one of the fascinating discussions with former NSW Labor Treasurer Michael Costa.

I am now of the opinion that Mr. Abbott is in another of his "I like to be liked by somebody (in this case Premiers), so will be a dill" mode.

Assuming that Peter Costello's assertion is correct, that would mean that the Federal Government spends a huge amount of money to collect the new tax (which roughly equals the amount of tax collected), and then that tax collected is given to the States. That is, Federal Government loses the money, the States get it. Mr. Abbott gets zero upside from this action to his budget or from voters, but gets all the downside (I recollect some promise about no new taxes).

But if the Federal Government gives the net proceeds of the new tax after costs to the States, then the States will get next to nothing, and the GST on imports are just paying the wages of extra Federal employees. Which is nearly as bad. Especially when one remembers that there is usually an additional fee put on the recipient for the collection of the taxes.
Regards,
Renato

[casstony]

They'll tax us one way or another, the exact form isn't something I worry about when one considers that there are far more pressing issues including the economy/jobs, debt levels, global warming, refugees, personal health and the lack of faster-than-light space travel.

[OzStarGazer]

Considering how many people buy online from overseas every day this is going to cause a lot of work for those who work at distribution centres and also huge delays. :sadeyes:

[gregbradley]

I imagine it will be administered the same as when you buy something over $1000.
Greg

[OzStarGazer]

Maybe, but the amount of items >$20 is much higher than the amount of items >$1000...

[DJT]

I saw this in action in the UK. I was staying at a relatives who is celebrating a 50th. She was expecting a parcel from a friend in Oz, a gift, but what she got was a letter saying it was held to ransom until VAT and a handling fee were paid online to parcel force. Oh, and if you wanted it delivered earlier then you had an option to pay extra for expedited delivery...

So it's not just on what you buy, but on what your friends and family will send you.

Basically auspost would be the tax collector so no dramas there. They must be doing this based on the declared value of goods made at point of posting. Ouch.

[dannat]

The cot of administering a system like this is overstated. It will likely raise millions for the gov't, auspostvwill administer most likely, causing longer delivery times. Aus is in he minority for our high 1zK limit, Canada is 50 I think, US is similar.
Itvwill likely be both new & secondhand stuff
Its supposed to benefit local shops, but its companies like Harvey Norman who campaign hard for it -though I don't see it competing with their stuff , who imports fridges/lounges from o/sea

[dreamstation]

How does this work for digitally delivered goods such as video games through steam and online retailers as well as e-books and music downloads?

Couldn't online and overseas retailers falsify the value of the contents in order to avoid the taxes? With the value of our dollar slipping and an additional tax on purchases some retailers will be losing a lot of business (websites like ozgameshop.com for example who were primarily aimed at Australians but was run from the UK.)

I'm all for supporting our own country but I also have to keep an eye on my budget. A lot of Australian retailers are just simply, overpriced. Stores such as Myer, Grace Bros, etc consistently sell items at or above RRP. It's their own fault for losing business to online and overseas retailers.

[rat156]

I, as a Federal employee, take offence to that remark.

It is interesting to hear the uproar when a few hundred jobs go in some manufacturing industry by commentators from all sides of politics, but when the Public Service is slashed, crickets...

Why do people consistently degrade those who work for Government?

Then again, I take offence to Andrew Blot as well.

Cheers
Stuart

[astroron]

So much for the global trade and economy. :mad2:
Hardly Normal will never get a single dollar of mine
even if he takes 80% off, it will still be over priced.
Cheers:thumbsup:

[Hagar]

This does seem like a bit of a storm in a tea cup. I and probably the rest of you will buy from who ever gives you the best deal and to that end we will just have to figure in the extra cost while making the initial purchase. All up the maximum slug will be a lavish $99. If you want to worry about anything you should be wondering why our dollar is only worth 70+ cents US when our economy is more stable than most of the rest of the world.
If this makes a few new jobs for Australia then for me, bring it on! Ford and Holden and Toyota have given us the boot and on the whole we still support them. Their product will undoubtedly go up in price as a result of them going off shore.

[Kunama]

Anything that makes Australian businesses (which employ Australian people) more competitive is OK by me. What is the point of being able to buy cheap stuff from overseas if we don't have jobs for our willing workers?

We all lament the loss of another Aussie retailer of our hobby goods yet we are the cause of it. Prices need to be higher here as our wages are higher.

My 1.8 cents ....

[AndrewJ]

I reckon this whole debate would be totally different if we did have 100% free trade. Ie Imagine how much cheaper living in Oz would be if "Cheap" doctors, lawyers, accountants, dentists, plumbers, govt servants, bankers etc could all come in at the lowest price with no restrictions and ply their trade.
Buyer in Oz still gets a choice of what to pay and what to risk.
Pure global capitalism at its best.

Most people wouldnt be able to afford even the cheap imports after a while, as the wages tumbled under the competition.
If the bulk of us want Australian wages and an Australian lifestyle, i find it hard to condemn those in retail who want a similar wage, but have to compete against the unregulated low price economies, when no one else does.
No easy answers when only half the playing field is open to competition.

Andrew

[Steffen]

No, of course it does not. People aren't buying overseas to save the GST. Hence, whatever amount of money Gerry Harvey and his cohorts have buttered into the Libs to make this kite fly is going to turn out a waste.

[Renato1]

Hi Stuart,
As a former Federal Employee myself, I'm not sure why you would take offence. What is the point of creating more jobs, or not slashing jobs that should go, merely to administer a new tax that in net terms raises next to nothing?

It's like paying people to dig holes and then filling them up again.

Or one could swell the size of the ATO by hiring and army or people to check every second-hand transaction on Ebay to ensure that people declared their capital gains on every item sold e.g. they bought a book for a dollar after 1985, and sold it for four dollars now on Ebay. That's a taxable capital gain.
Regards,
Renato

[rat156]

Well, I thought that you were implying that spending money on Federal employees was a waste of money, I reread your original message and your presumption that it (the garnering of GST on imports >$20) would not be cost effective is based on Peter Costello's thoughts on the matter. He may be right, but it looks like it's here, and it will stay. The productivity commission 2011 report is now four years out of date and is probably based on data from the years before that, I would suggest that with the increased volume of OS internet purchases and some efficiency gains the break even point is approaching quickly, or may have even been reached.

What's wrong with keeping people employed anyway? If this levels out the retail field a bit and encourages people to buy locally, thereby keeping locals employed, keeping local businesses going I'm all for it. When I do buy astro gear new, I try to buy locally, my PMX was an exception as I preordered it from the manufacturer.

Gerry Harvey was a big proponent of this action, which makes me think that it can't be good, but from say a Bintel point of view, I can see advantages.

Oh and CGT only applies to collectables >$500 in value, assuming the book inquisition was a collectable. It is also the taxpayer who should declare any CGT or risk prosecution, so no army required. A few more ATO officers to investigate why 55 Aussie millionaires can pay no income tax would be a good thing.

I thought this Government wasn't into raising taxes?

Cheers
Stuart