The new tax being proposed by the Turnbull government

Update I: Submission available here.

Update II:  Chris Berg and I have an op-ed at The Australian on this topic.

Chris Berg and I have made a submission to the Senate inquiry into the GST low value good bill. I’ll post a link as soon as it is posted at the APH website.

Our argument is basically that while this looks like an integrity measure and an extension of the GST that it is in fact a new tax. It has enough superficial similarity to the GST to hoodwink Australians (and the cross bench) into supporting it, but it is a new tax on internet commerce.

From our executive summary:

  • The elimination of the low-value threshold for the Goods and Services Tax constitutes a new tax on inbound internet trade – that is, it will function as a tariff imposed on Australian consumers.
  • The tax will raise very little revenue and will be expensive and complex to administer.
  • The tax deviates substantially from the existing GST design.
  • The tax is less a tax on consumption but on the reputation of foreign internet businesses.
  • The tax is inconsistent with the government’s commitment to deregulation, the promotion of international trade, and its innovation agenda.
  • The tax rejects principles that the Howard government established in terms of deregulation and the promotion of international trade.
  • The tax will do nothing to address the issue of high retail prices in Australia.
  • While masqueraded as a tax integrity measure, this tax is clearly intended to operate as a form of protectionism.
  • The tax will reduce competitive pressure within the domestic Australian economy, and (as a consequence) expose Australian consumers to government sanctioned higher retail prices.
  • The tax will lead to Australian consumers substituting away from large reputable electronic distribution platforms to more disreputable platforms leading to higher rates of internet fraud and possibility criminality. Product safety and consumer protection rights are likely to be compromised.
  • The tax has few safeguards to ensure compliance and remittance of revenue to the Australian government.
  • The tax contributes to increased levels of regime uncertainty within the Australian policy environment.
  • Parliament should reject the Treasury Laws Amendment (GST Low Value Goods) Bill 2017.
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108 Responses to The new tax being proposed by the Turnbull government

  1. Senile Old Guy

    Parliament should reject the Treasury Laws Amendment (GST Low Value Goods) Bill 2017.

    Excellent points but this government, and our next government, are addicted to tax and spend.

    And who knows what the senate will do?

  2. stackja

    SOG – Many voters are addicted to government handouts.

  3. notafan

    Funny

    I am certain that Howard allowed that under $1000 threshold to allow Australians who could not afford to travel the same small amount of tax relief as that provided to people who could afford to travel.

    I don’t imagine he saw a future of internet sites like Amazon, eBay and Alibaba where people could daily make multiple purchases of $999 and avoid GST.

    If we have the internet tech to make international trading so easy and affordable, then we have the tech to make administration of the tax affordable.

    Though I could not care less about revenue, maybe they could give all the net collection to WA.

  4. H B Bear

    Treasury Laws Amendment (GST Low Value Goods)(Shut Gerry Harvey up) Bill 2017.

  5. Habib

    And it is utterly dependent on overseas suppliers acting as tax collectors for a regime with no ability whatsoever to enforce those collections. Truly cretinous even by the stunningly retarded standards of this abomination of an excuse for a “liberal” government.

  6. Rabz

    So, the new impost is intrinsically inefficient and will raise less revenue than the costs of collection, not to mention that it will annoy the hell out of a large swathe of erstwhile coalition voters.

    They truly are beyond hopeless.

  7. Senile Old Guy

    So, the new impost is intrinsically inefficient and will raise less revenue than the costs of collection, not to mention that it will annoy the hell out of a large swathe of erstwhile coalition voters.

    Yeah, but the evidence is that they don’t matter, and there are not many left, as the recent NewsPoll shows.

  8. Cold-Hands

    Nevermind that the cost of collection will dwarf any revenue collected… this is just to get Gerry Harvey off their backs.

  9. Empire GTHO Phase III

    I am certain that Howard allowed that under $1000 threshold to allow Australians who could not afford to travel the same small amount of tax relief as that provided to people who could afford to travel.

    Link? Regardless of stated policy intent, the Parliament of the day passed the bill, one hopes cognisant of unstated consequences.

    I don’t imagine he saw a future of internet sites like Amazon, eBay and Alibaba where people could daily make multiple purchases of $999 and avoid GST.

    I’ll need to see evidence before drawing conclusions about the prevalence and scale of this phenomena. From the late 90s, predictions for the scope and scale of e-commerce were broad. Of course, not everyone agreed. Gerry Harvey explicitly rejected online trading. He was wrong. What we see now is essentially the dream the market grifters were pimping on the ASX from 99-01.

    If we have the internet tech to make international trading so easy and affordable, then we have the tech to make administration of the tax affordable.

    The technology exists, but not the political will to use it. Not yet. When that inevitably changes, we will pay a price in liberty.

    https://www.armstrongeconomics.com/world-news/taxes/imf-issue-working-paper-on-eliminating-cash/

    Though I could not care less about revenue, maybe they could give all the net collection to WA.

    You should. Taxes that deliver less revenue than they cost to raise can have no purpose other than social engineering.

    I get that you’re emotionally invested in this issue and I don’t discount the equity argument for universal application of +10%. What I don’t accept is any remedy that punishes the many so that the cheating few might taste comeuppance to satiate the wounded.

    I look forward to reading the Berg & Davidson submission.

  10. Alex Davidson

    At this stage inefficiency will be the last of their concerns. Plebeian obedience and make-work schemes rank far higher. However I can see this leading to calls for worldwide taxation administered by the UN…

  11. Oh come on

    Excellent. You will be ignored, of course.

  12. notafan

    You should. Taxes that deliver less revenue than they cost to raise can have no purpose other than social engineering.

    I get that you’re emotionally invested in this issue and I don’t discount the equity argument for universal application of +10%. What I don’t accept is any remedy that punishes the many so that the cheating few might taste comeuppance to satiate the wounded.

    Well we don’t know that they will deliver less revenue. And my point was I did not support the raising of additional taxes with a throw away comment about WA.

    Oh dear emotionally invested. I would argue as a small businessperson that I should also be exempted from collecting GST, it certainly cost me more administratively than the revenue it raises.

    But who cares, because I am already a captive and with super elastic demand for my goods I certainly bear the actual tax burden of the GST.

  13. notafan

    I’ll need to see evidence before drawing conclusions about the prevalence and scale of this phenomena.

    It’s called hyperbole.

    But you could if you wanted to, shipping costs from places like China are minuscule, so it is at least feasible but in any case that would be cash economy stuff and while it clearly exists I don’t know to what extent.

    No point for legit businesses anyhow because the GST on imported goods gives rise to imput credits, so same difference.

  14. notafan

    Link? Regardless of stated policy intent, the Parliament of the day passed the bill, one hopes cognisant of unstated consequences.

    What difference does it make? These things are usually in speeches and all I am really saying is that administrative de mininuses should reflect actual administrative costs costs of collection.

    They are much, much lower in equivalent jurisdictions like the UK and Canada.

  15. Yohan

    Wait, we are actually going to go through with this? The Harvey Norman 2017 bill?

  16. .

    How about a tax on horses, $5k per horse, we can call it the Princess Gerry Bill 2017.

    He should just sell up to the Good Guys and put the rest into agriculture and ride the tail end of the soft commodity boom.

  17. Romeo Whiskey

    I suspect that I’ll be on the opposite side of this debate with fellow Cats with the following point –

    While I don’t disagree with the conclusion regarding the inefficiencies within this tax (and the continued spend-a-th0n that the government is addicted to), to me it comes down to should one offshore seller have a pricing advantage over a domestic seller purely through taxation reasons?

    As annoying as Gerry Harvey is – in my view, he has a valid point (this time).

  18. .

    Is imposing the tax to get rid of the distortion worth it, Romeo?

  19. Hydra

    if you think offshore sellers have an advantage purely due to taxation reasons you have rocks in your head

  20. The BigBlueCat

    The general principle of “is the seller registered for GST?” ought to apply. Now I know that imports above $1000 generally are caught wrt GST (with the import agent collecting the amount before the goods are released), but from a general standpoint, I agree that the collection costs will likely outweigh the revenue benefits for such items (many of which are second-hand on eBay anyway – eg old film cameras, lenses, etc).

    Gerry Harvey can bleat all he likes – but he’s not in the second-hand goods market, nor is he importing clothing and other like items that make up a lot of the internet trade.

    Has anyone done the numbers based on?
    a) loss of income to import agents
    b) increase in PAYG income tax collected (ie more workers administering GST)
    c) likely increase in GST collected and any subsequent GST input claims
    d) cost of implementing systems to administer this tax
    e) anything else I haven’t considered?

  21. Robber Baron

    A new tax? It’s only fair. Everyone needs to pay their fair share. It’s the right thing to do.

    A new government hand-out? It’s not fair. Certain classes receive favourable treatment. It’s the wrong thing to do.

    Ahhh, government. The only place where tax is fair and hand-outs are not.

    Nuke Canberra now!

  22. notafan

    I agree that the collection costs will likely outweigh the revenue benefits for such items (many of which are second-hand on eBay anyway – eg old film cameras, lenses, etc).

    Really?

    Second hand items sellers are typically domestic, in any case sellers turning over less than $75,000 PA, regardless of domicile, will not be affected by this change will they?

    Ebay is now primarily a platform for sellers of new goods; I don’t know the break up of that between international and domestic but I suspect international wins hands down.

    BTW Australian sellers can’t even register on Amazon, not unless they can get their hands on a US credit card anyhow.

  23. notafan

    b) increase in PAYG income tax collected (ie more workers administering GST)

    Why would that be an impact, as this is intended to affect international businesses selling directly to Australian consumers.

    c) likely increase in GST collected and any subsequent GST input claims
    d) cost of implementing systems to administer this tax

    Paying GST in imports will actually simplify paperwork for GST registered businesses surely, no/less need to separate out the no imput credit purchases.

  24. Habib

    Vast majority of transactions in this class are small items ordered from China via a retail platform such as eBay, or Alibaba. If Scomo thinks the Chicoms are going to a). collect tax on his behalf or b). hand it over if they do, he’s actually dumber than even my jaundiced view would have him on the scale of witlessness.

    I’m way beyond disappointment with these dolts, disgust, seething contempt and focused rage are probably more the go now.

  25. Rococo Liberal

    WHat is it with governments? WHenever ter is a simple legislative solution to an issue, they ignore iot and instead add complexity that isn’t needed and won’t work.

    The ”problem ” here was a $1000 threshold. So you would think that the government would just lower that threshold, meaning that we had to pay GST on importations exactly as we did if we imported goods valued over the threshold.
    But no, that would be too simple. Instead the government understakes a vast rewrite of the GST law and decides that it can in fact tax foreigners living abroad.
    How are they going to enforce this?

  26. Habib

    How are they going to enforce this?

    I’d say the response from the Peking politburo will be along the lines of Stalin when informed that the Vatican was upset with his persecution of the Kulaks- “Fuck the Pope, how many divisions does he have?”

  27. notafan

    The ”problem ” here was a $1000 threshold. So you would think that the government would just lower that threshold, meaning that we had to pay GST on importations exactly as we did if we imported goods valued over the threshold.

    exactly

  28. Art Vandelay

    if you think offshore sellers have an advantage purely due to taxation reasons you have rocks in your head

    Spot on. As the Productivity Commission found, Australian retailers are disadvantaged by regulations imposed by Australian governments that drive up the cost of rent, wages, power prices etc. The GST has very little to do with it.

    If this was about making the marketplace ‘fairer’, then the solution would be to, for example, reform land use regulations, relax industrial relations laws and abolish the RET. Instead, it’s about appeasing Gerry Harvey and giving the perception that the government has dealt with the problem (without them having to actually make any tough decisions).

  29. Sinclair Davidson

    to me it comes down to should one offshore seller have a pricing advantage over a domestic seller purely through taxation reasons?

    If this was the case I’d be a tad more sympathetic to the argument. Mikayla Novak did some price comparisons a couple of years ago and found price differentials between 14% to 70% for the identical products.

  30. notafan

    There are several important drivers of high retail costs in Australia, including a highly regulated labour market, severe land use restrictions, and trading hour conditions, which are not being addressed by governments.

    Yes well the government should address all those issues too.

  31. Diogenes

    Habib,
    The point of collection will be who delivers the parcel, be itDHL, ups or austpost .. no gst no delivery.

    Nota,
    Back in the day when the threshold was only 500 , i had 3 parcels come in the same week, although ordered months apart, one from a small manufacturer in the uk, marked model railway locomotive kit, one from walthers, in Milwaulkee in the us with a description model railroad components, and another containing modelling tools from a company based in NY all were in the range 300-400 dollars each, before i was allowed to collect my last parcel, i had to pay gst for the combined value of all 3. Despite arguing the fact, email trail, receipts etc that no single purchase was related in that they were from the same business or even made with in the same week , the fact that the customs declarations all had the word model railway/road was enough to prove that i was trying to avoid gst.

  32. Motelier

    Seeing as how the government is all gung-ho to create an equal playing field for retailers, I demand they do the same for other government fees and charges that impost on SME’s in Aust.

    Fair dinkum, this lot have completely lost the competitive spirit of free markets.

    Stupid. Fucking. Liberals

  33. notafan

    You were unlucky Diogenes.

    Though I don’t remember it ever being $500.

    On the other hand my mother and I both purchased art, individually under the threshold and got it shipped home. To save shipping we put it in one parcel.

    Not only did we, or rather I, get stung GST, I had to pay a wood inspection fee for the frame.

    This should be a simple matter of establishing a reasonable de minimus, as to enforcement the UK have a simple method to encourage ‘voluntary’ collection at source.

    So naturally you can expect some convoluted process instead here.

  34. Habib

    Habib,
    The point of collection will be who delivers the parcel, be itDHL, ups or austpost .. no gst no delivery.
    They were touting it be included in the sale price and collected by the seller, is that gone now? If it’s point of entry they’re going to need a shitload more customs troops to do parcels post, and HVSOs like DHL parcel express, FedEx and UPS will need a heap of extra brokers, who of course don’t exist. I safely predict abject failure, and the already shit postal system FUBAR’d like never before, a truly stunning and epic litany of idiocy I doubt even Labor/Greens could date to emulate.

  35. Habib

    Was $250 before it went to $1000, commercial shipments under $250 had to still be cleared on what was called an ICD. Some low value stuff was “screened free” by customs if there was no quarantine impediment. Of course no-one in Border these days was around then, and thus has a smidgin of a clue what’s involved, especially given the exponential increase in volume. And of course consultation with industry has been non-existent. These dickheads are actually making terrible Labor state governments look mildly malignant in comparison. If we could weaponise stupidity, we’d rule the galaxy.

  36. Habib

    On the other hand my mother and I both purchased art, individually under the threshold and got it shipped home. To save shipping we put it in one parcel.

    Works on a shipment level, not invoice level. Total value per shipment has to be >A$1000. Also if the federales think someone’s pulling a fiddle by splitting shipments, they’ll hold them until the whole lot turns up, and then not only charge duty/GST as applicable but will often add a penalty for revenue evasion.

  37. notafan

    Works on a shipment level,

    Well the problem was I didn’t even think about the GST implications at the time of arranging the shipping, had I done so, I might have made alternative arrangements.

  38. OneWorldGovernment

    I think it TIME that every single Federal politician be taken to court to prove they are not mentally challenged.

    Fuck them All

  39. Jannie

    The Libs have an old fashioned plan to balance the budget and repay the debt. You simply increase your revenue so that its higher than your expenditure.

  40. True Aussie

    Is imposing the tax to get rid of the distortion worth it

    What a stupid question. You can’t have a free market when some entities in competition are taxed and others are not.

  41. RobK

    It wouldnt surprise me if some retailers actually lost loyalty and goodwill over thischeme.

  42. Bruce

    “If Scomo thinks the Chicoms are going to a). collect tax on his behalf or b). hand it over if they do, he’s actually dumber than even my jaundiced view would have him on the scale of witlessness.”

    Unless, of course, there is some sort of “creative” quid (so to speak) pro quo.

    Imagine your worst politico-economic nightmare, and that will just be the “base-line”.

  43. .

    True Aussie
    #2350958, posted on April 10, 2017 at 2:59 pm
    Is imposing the tax to get rid of the distortion worth it

    What a stupid question. You can’t have a free market when some entities in competition are taxed and others are not.

    You don’t understand how the GST works, do you?

    No “entities” are specifically exempt regarding imports, only certain transactions.

    There are volume based entity transactions domestically. Do you really want the ATO cracking down on a lady who runs a ballet studio in a country town? The idea of the GST is that her spending will get taxed anyways.

    I don’t think you’ve actually shown that exemptions pertaining to efficient collection prevents a GST or a VAT from causing a small as possible and even increase in direct resource costs.

  44. .

    Habib
    #2350934, posted on April 10, 2017 at 2:22 pm
    On the other hand my mother and I both purchased art, individually under the threshold and got it shipped home. To save shipping we put it in one parcel.

    Works on a shipment level, not invoice level. Total value per shipment has to be >A$1000. Also if the federales think someone’s pulling a fiddle by splitting shipments, they’ll hold them until the whole lot turns up, and then not only charge duty/GST as applicable but will often add a penalty for revenue evasion.

    This cannot be forgotten. The anti-avoidance provisions under various taxes and their parent legislation are brutal and give the FCT powers of time travel and telekinesis.

  45. Rob MW

    This ort to be good, taxing genuine copy Chinese knock-off’s (e.g – small engine ‘Chonda’s’) at the local sweatshop will be adventurous in no small way. Note to politicians: never come between a knock-off shop and his/her dollar a day employment EBA.

    They better not increase the price of $2,000 knock-off chainsaws ebaying for $250 and landfilling after about 3 years, or 3 starts, whichever comes first.

  46. Oh come on

    I don’t think the tax will be that hard to implement. OS suppliers either shipping or facilitating the shipping of significant quantities of retail products into Australia (eg Amazon, eBay, The Book Depository, Microsoft, well-known sellers of digital goods etc) will surely comply with a federal government directive to add a 10% tax onto their imports and forward the proceeds to the ATO. This would cover at least 50%, probably much more, of the value of goods currently not being taxed. So this could be implemented with minimal effort and generate a substantial additional windfall. A small-time supplier of, say, model train parts, may not comply. And the ATO wouldn’t bother chasing this up.

    I don’t think it would be very complicated or expensive to apply this new tax. If the ATO is getting GST revenue from much or most of the imported retail action currently exempt from the GST, I reckon they’d be happy.

  47. Squirrel

    The anecdotes about varying thresholds, and selectively (unhelpful) interpretation of such are in line with my recollections – at one point, it seemed to be the case that the threshold (as applied, if not legislated) depended on whether the goods were brought in by sea, or by air. None of this was helped by the “protect the revenue” mentality of former Customs officials who had moved on to private customs clearance outfits – always on the lookout to maximise the revenue extracted from members of the public who had entrusted the delights of clearance paperwork to them. These people are no doubt rubbing their hands together at the thought of what is about to happen.

    With this background in mind, eliminating the threshold has the prospect of being a clusterf**k of epic proportions, with many, many more voters caught in the net. The media sob stories about “Mum and Dad” hobbyists/collectors/importers being “stunned”, “gobsmacked” etc. etc. by GST/Customs duty “bill shock” should make for some fun viewing.

  48. .

    I expect a shitstorm of teaching moments. THAT is the cost of your government mandated healthcare, and so on.

  49. Cynic of Ayr

    Still on Tax, but a bit OT.
    The ABC SBS get 1.5 Billion Dollars a year.
    Does anyone know how much it costs, (or a good guess at) an equivalent TV company to run their business?
    I guess that is roughly income less profit = expenses.
    Expenses being what it costs to run the place, as the ABC SBS don’t have profit, just income and expenses.

  50. notafan

    No “entities” are specifically exempt regarding imports, only certain transactions.

    Not even internationals below the GST turnover threshold?

  51. notafan

    I’m with you OCO.

    Amazon etc voluntary collect VATs for cross border transactions in Europe and Amazon au voluntarily registered for GST for that site.

    One you have the big guys in the net you wouldn’t bother with the minnows.

    I remember when small Australian ebay sellers were getting a rash of refused parcels back from the UK when their local POs cracked down on small imports, VAT plus a hefty handling fee.

    Great incentive for large retailers to prepay VAT for their customers.

    All that matters then for consumers then is whether the price is still right.

  52. alan moran

    Julia Gillard commissioned a study that came to the same conclusions as the Davidson/ Berg paper.

    Many would argue on practical grounds that $3000 is negative in terms of government costs.

    But is not the issue about equality of treatment? Is not the tax simply designed to place an impost equal to that on domestic retail sales as that on overseas supplied goods? The domestic supplied goods have a GST chain of imposts, which exports from those countries with a GST (including exports from Australia) do not incur.

    A domestic retailer would be understandably miffed if, in addition to having all the impositions of wage rates and other regulatory intrusions, her overseas competitor did not even have to pay the same tax rates.

    If the overseas goods are as competitive as the work by Mikayla estimated them to be then they would not suffer from the impost but I doubt that all margins are that great. As with other overseas tax collections the ATO will lean on Amazon et al to do the collection and to pass it on.

  53. notafan

    A domestic retailer would be understandably miffed if, in addition to having all the impositions of wage rates and other regulatory intrusions, her overseas competitor did not even have to pay the same tax rates.

    No no we just love being that extra bit uncompetitive!

  54. .

    notafan
    #2351002, posted on April 10, 2017 at 4:49 pm
    No “entities” are specifically exempt regarding imports, only certain transactions.

    Not even internationals below the GST turnover threshold?

    Hence it is transaction based.

  55. Oh come on

    Of course, savvy consumers with a VPN and an ability to reship their items from a foreign address will be able to avoid having an Australian tax levied on their item. However, the proportion of consumers able or even willing to do this to dodge paying GST on an item valued at less than a grand would be small, I’d say.

  56. Oh come on

    Ps The Book Repository, even

  57. notafan

    Of course, savvy consumers with a VPN and an ability to reship their items from a foreign address will be able to avoid having an Australian tax levied on their item

    I suspect that reshipping would cost much much more than the 10% GST, especially from the US.

  58. Helen

    Not only do you have to pay GST on the value of the article you are shipping in, you also have to pay GST ON TOP of GST for the freight from the place the gear landed in OZ and the import duty was assessed to the closest capital city. In my case, Sydney Darwin freight, had GST added on top of the cost of freight which already had GST applied.

    I queried but it was all there in the fine print.

  59. Helen

    Sorry that comment was me, not doppleganger Helen

  60. Megan

    . If Scomo and Lord Waffle of Wentworth thinks the Chicoms are going to a). collect tax on our behalf or b). hand it over if they do, they are actually dumber than even my jaundiced view would have them on the scale of witlessness.

    FIFY.

  61. Dr Faustus

    Mikayla Novak did some price comparisons a couple of years ago and found price differentials between 14% to 70% for the identical products.

    Mrs Faustus does some price comparisons several times per week. The price differentials seem to mostly be in the 50%-75% “No darling, it’s saving, not spending” range. Plus convenience, plus the huge range of stuff available online that you simply can’t buy in Australian shops.

    I would be amazed if an additional 10% materially altered online shopping habits (other than that some online retailers are already no longer shipping to Australia “For legal reasons“).

    So: poorly thought through, inefficient, intensely irritating, and ineffective.
    A near perfect leitmotif for Australian government.

  62. You can avoid this new GST by quoting an ABN to the foreign entity. I find it hard to believe most of them will even know this or be prepared for it or even care. This is targeted at a few major companies like google, microsoft, amazon etc

  63. Adelagado

    A simple question needs to be answered before the the threshold level is lowered…

    “How many of the packages valued at under $1000 are imported by businesses either for their own use or for resale?” (Businesses who import packages under $1000 are already paying GST)

    My research has not been able to turn up any papers that put a value on this other than packages cleared through customs agents. Without the answer the government has no idea how much this tax will raise (if anything).

  64. rickw

    Excellent points but this government, and our next government, are addicted to tax and spend.

    No point looking for logic or consistency when the modus operandi is to rip as much money out of people as possible.

  65. Rohan

    notafan
    #2350781, posted on April 10, 2017 at 12:00 pm
    I don’t imagine he saw a future of internet sites like Amazon, eBay and Alibaba where people could daily make multiple purchases of $999 and avoid GST.

    If we have the internet tech to make international trading so easy and affordable, then we have the tech to make administration of the tax affordable.

    Be that as it may, you can also make thousands of individual online transactions for goods and services under one USD in value. Last time I looked at B2B electronic transactions, the cost per transaction is in the range of $0.20.

    Nothing that involves the government is effecicient or value adds. So the cost per transaction will be significantly higher. It will generate a shitload less than treasury would indicate.

  66. cynical1

    I don’t imagine he saw a future of internet sites like Amazon, eBay and Alibaba where people could daily make multiple purchases of $999 and avoid GST.

    Well, I hope somebody points out that if the $999 items are second hand, there is no GST due.

    Good luck enforcing the coming clusterfuck…

  67. cynical1

    me it comes down to should one offshore seller have a pricing advantage over a domestic seller purely through taxation reasons?

    It’s not purely taxation.

    Many goods are not available here.

    The good times have gone.

    A weak A$ means overseas purchases are not as attractive, toss in shipping fees and
    the locals have the advantage.

    Be careful what you wish for.

  68. Notafan

    A weak Aussie also makes business imports more expensive.

    And it should go without saying that an isolated low density low population country businesses won’t manufacturer or stock every conceivable thing people might want to buy, like cars for example.

    I’ve never understood ‘it isn’t stocked in Australia’ as an argument against a lower de minimus for GST.

  69. Notafan

    And secondhand goods are not exempt from GST.

  70. Sinclair Davidson

    I have discovered that Australian Post will not be targeted by this new tax – so organise them to transport your goods.

  71. Infidel Tiger

    How do you get a package from overseas delivered by Australia Post?

  72. Habib

    …….members of the public who had entrusted the delights of clearance paperwork to them. These people are no doubt rubbing their hands together at the thought of what is about to happen.

    Steady on Old Mate, I’m one of what you so wantonly besmirch. I go out of my way to minimise what’s extracted by the fiscal fiend, and get a wedge for doing so. Don’t know too many brokers who lose sleep over stretching a tariff concession’s ambit to cover a clearance. Like most though I avoid the public like solar panel salesmen, they are invariably dickheads who did no research whatsoever before ordering some piece of shit from Xingdong Dodgy Engineering and Tactical Nuclear Weapon Works.

    Parcels post was always $1000 for requiring an entry, and used to do books and periodicals on s monthly return for big volume importers. No-one in the industry thinks this cretinous policy is any more than a colossal cluster-fuck that will be an unmitigated disaster. There’s no money in this amount of pissant work, and what’s more there’s a chronic shortage of qualified professionals to handle the volume of work now.

  73. Adelagado

    notafan
    I don’t imagine he saw a future of internet sites like Amazon, eBay and Alibaba where people could daily make multiple purchases of $999 and avoid GST.

    rohan
    Be that as it may, you can also make thousands of individual online transactions for goods and services under one USD in value.

    Anyone making ‘multiple $999 purchases’ or ‘thousands of $1 purchases’ is almost certainly going to be a registered business and is therefore going to pay GST no matter how they configure the packages.

    Even if they buy a $2000 package and get the supplier to do a fake $900 invoice they are still going to pay GST on the final re-sale price of those goods and, in the end, that’s the only figure that really matters. (Any GST paid prior to that simply becomes a credit).

    There is bugger-all extra GST that can be squeezed out of business in regard to this low-value threshold story.

  74. Habib

    “I queried but it was all there in the fine print.” You also pay FST on entry on the cost of freight and insurance, charges incurred overseas. Probably unconstitutional, but never challenged.

    “How do you get a package from overseas delivered by Australia Post”? When you find out, let me know. I think it involves stuffing a postman’s family into a car boot and extensive negotiation by shortwave radio through a 3rd party negotiator. I had one from 2 blocks away that turned up after only 4 working days, my missus however ambushed him at the side gate as he was leaving a card nominating the wrong post office somewhere that would require a foresnsic search team to locate.

  75. Adelagado

    My post above was a little ambiguous. I should have made it clearer that in the situations I quoted those businesses are ALREADY paying the said GST. My post perhaps sounded like I was describing a future regime.

  76. Notafan

    Adelagado

    I agree

    Only exceptions would be businesses operating below the turnover threshold and anyone operating within the cash economy . Ie not many.

    The legislation change is clearly targeted at private consumption.

  77. Sinclair Davidson

    How do you get a package from overseas delivered by Australia Post?

    You post (or have it posted) it in the foreign country and Australia Post delivers it to your house. It might be a Victorian thing.

  78. Adelagado

    Notafan

    The legislation change is clearly targeted at private consumption.

    Private consumption…. and only on items delivered by a freight company. How small is that market?

  79. Mark A

    Notafan
    #2351271, posted on April 10, 2017 at 10:29 pm
    The legislation change is clearly targeted at private consumption.

    Hate be picking nits again but is there, in the finality of production and consumption any other outcome than “private” consumption?

    Please no reference to intermediate between company dealings etc.
    Whatever you do it will have to go to someone private, even electrickery.

  80. Norman Church

    Does this change require the agreement of the states. I hope so. If so, WA can hold the rest of the country to ransom. Only way anything is going to change about the iniquitous GST distribution.

  81. don coyote

    Good on ya Sinkers!

  82. nfw

    The gummint also needs to abolish that tax avoidance loophole on so-called duty free goods brought inbound to the country. If you have to pay it on posted/freighted articles (and those in shops) then it should apply equally at all entry points. Leftie luvvie “progressives” like it when imposts are applied equally don’t they?

  83. The BigBlueCat

    notafan
    #2350887, posted on April 10, 2017 at 1:38 pm
    b) increase in PAYG income tax collected (ie more workers administering GST)

    Why would that be an impact, as this is intended to affect international businesses selling directly to Australian consumers.

    I’m thinking that there would be more staff at the point of entry into Australia identifying items and levying the GST. Their workload and staffing would increase significantly if they are required to be the collection agencies for all items under $1000. I think it would be impractical to have so many foreign sellers do the collection on behalf of the ATO, although it would be possible for PayPal to deduct 1/11th (the sellers would be unhappy with that). But those quoting credit cards or using international payments other than PayPal would escape the net. Of course, PayPal could just add the 10% onto the seller’s price, but not everyone uses PayPal, and PayPal users will find other avenues to avoid the impost.

    c) likely increase in GST collected and any subsequent GST input claims
    d) cost of implementing systems to administer this tax

    Paying GST in imports will actually simplify paperwork for GST registered businesses surely, no/less need to separate out the no input credit purchases

    You’ve never done it, have you? Businesses end up processing multiple invoices instead of just one – one from the supplier and one from the import agent. Also means an additional payment and a delay in having the item delivered (it won’t be released until the GST is paid). It is a long way from simplification, and represents a real inefficiency in productivity terms for businesses, for a tax they can claim back anyway if they are registered for GST. For Fred Average (who this is designed for) he will have to fork out more and experience a delay if they have to pay an import agent (eg Australia Post) over the counter.

    I can’t see the brainiacs in the ATO trying to make this easy for anyone – especially if the ATO website is anything to go by.

  84. notafan

    You’ve never done it, have you? Businesses end up processing multiple invoices instead of just one – one from the supplier and one from the import agent.

    hmm actually yes, by the container load and very regularly in small quantities under $1000 always via AP.

    I already mentioned that for me, having all my stock purchases subject to GST would be much simpler administratively.

  85. notafan

    Also means an additional payment and a delay in having the item delivered (it won’t be released until the GST is paid).

    And this is why having Amazon and other large sellers deduct at source, like they do for across border sales makes sense.

    As I said this measure is clearly targeted at business to consumer transactions.

    And Sinc has said that AP transactions will not be included anyhow.

  86. Snoopy

    Sinclair Davidson
    #2351230, posted on April 10, 2017 at 9:56 pm
    I have discovered that Australian Post will not be targeted by this new tax – so organise them to transport your goods.

    Where did you discover this, Sinc?

  87. notafan

    Hate be picking nits again but is there, in the finality of production and consumption any other outcome than “private” consumption?

    Well no, but the government thinks it is missing out on tax revenue because it set a too high de minimus on overseas business to consumer transactions.

    Look if the government wants to exempt all transactions below $100o from GST because the admin burden is too great then that will be fine with me.

  88. The BigBlueCat

    notafan
    #2351631, posted on April 11, 2017 at 11:57 am
    Also means an additional payment and a delay in having the item delivered (it won’t be released until the GST is paid).

    And this is why having Amazon and other large sellers deduct at source, like they do for across border sales makes sense.

    You are then left with the issue of the Australian government levying a tax on a foreign corporation, or having said foreign corporation act as a collection agency for the ATO. It doesn’t seem very practical or particularly legal to me.

    As I said this measure is clearly targeted at business to consumer transactions.

    And Sinc has said that AP transactions will not be included anyhow.

    I read Sinc’s bit on Australia Post – I agree. But StarTrack Express? TNT? DHL? When they rock up to my door, I currently just sign … will I now have to give them money too before I get my package? Currently Australian Customs & Border Protection Service have the responsibility for collecting the GST on imported items – how easy will the interface be between the carriers and ACBPS for all these small items?

    GST is aimed at the value add of supply as it moves from entity to entity. The GST cost rests with the one who is not able to claim the input tax credit.

    My view is that they only intend to access this sub-$1000k value GST revenue from the big players – if you’re buying clothing from, say, the UK using the supplier’s website, it’s going to be very hard for the ATO to identify the financial transaction and collect. It will turn people away from Amazon, eBay and other such on-line merchants (I guess this is where Sinc’s concept of it being a tariff comes in).

    The threshold is there because it’s an efficiency measure – it seems to me that removing it will reduce efficiency, especially for those who don’t use Amazon, eBay, PayPal, etc.

  89. Habib

    It’s not even so much the fiddly amount of tax (A$175 on a $999 shipment if subject to duty and not evil booze or debbil darbs), it’s the extra raft of bureaucrats, and further delay to an already sluggish system, beset already with the grease-free gears o’gummint. We should be reducing imposts and restrictions across the board, rather than bunging even more on, especially to pander to a rent-seeking douche like Harvey.

  90. notafan

    It will turn people away from Amazon, eBay and other such on-line merchants (I guess this is where Sinc’s concept of it being a tariff comes in).

    Amazon Australia voluntarily registered for GST for it’s au ebook site.

    This issue is not unique to Australia and as mentioned upthread, Amazon and its multiple subsids, like Book Depository already collect cross jurisdictional VATs for other countries,

    Ebay is a third party platform not a retailer, I don’t know what its large sellers will do. I suspect that as Amazon does, they will voluntarily collect the GST to maintain their customer base, who might otherwise be caught up in the customs maze.

    It really depends on how many sellers use services other than AP.

    Most of my small international purchases are delivered by AP who won’t be affected by the change.

  91. calli

    it’s the extra raft of bureaucrats,

    Thank you Small Business. Thank you Government.

  92. Snoopy

    Presumably there are existing procedures in place to collect GST on couriered or posted goods valued at over $1000 coming into the country? Why is it impossible for something worth $900?

  93. Combine Dave

    The funny thing is inspite of all the fairness, the extra cost (and the cost to the public to enforce this), it will probably still be better, cheaper and easier to purchase from o/s. Not to mention superior range and features on o/s goods.

    As the collapse of Dick Smith shows.. Aussie consumers aren’t coming back
    Ever.

  94. The BigBlueCat

    notafan
    #2351662, posted on April 11, 2017 at 12:48 pm
    Amazon Australia voluntarily registered for GST for it’s au ebook site.

    Irrelevant for this issue – that makes them a domestic supplier in the domestic market, and being registered for GST they collect GST and remit to the ATO – I have no issue with that.

    I’m all for foreign companies voluntarily collecting AU GST for these sub $1000 items if they can – but it appears to me these changes are virtually unenforceable on the supplier if they don’t have an Australian subsidiary. It will be a change with little upside and plenty of downside.

    So which of the dot points that Sinc presents do you disagree with and why? They all seem perfectly valid to me ….

  95. notafan

    Irrelevant for this issue – that makes them a domestic supplier in the domestic market, and being registered for GST they collect GST and remit to the ATO – I have no issue with that.

    No it isn’t because ebooks are no more connected to Australia than the internet is

  96. notafan

    Well the premise that is is a new tax for starters.

    It is simply a change to the administrative de minimus for the imposition of gst on mported goods.

    As you can see Australia’s is one of the highest in the world, along with the US, which doesn’t have a national VAT, GST regime, and Azerbaijan.


    Here is a list of international de minimuses.

  97. The BigBlueCat

    notafan
    #2351750, posted on April 11, 2017 at 2:25 pm
    Irrelevant for this issue – that makes them a domestic supplier in the domestic market, and being registered for GST they collect GST and remit to the ATO – I have no issue with that.

    No it isn’t because ebooks are no more connected to Australia than the internet is

    If they are already collecting GST from the end consumer via their Australian subsidiary, there is no issue. If the supply of the eBook to Amazon is made outside Australia, there is no GST implication since nothing has been imported yet. The import happens when the Australian consumer buys the eBook. Amazon Australia may well be paying the GST on the imported eBook, only to claim back the input tax credit on their BAS, and remitting a nett difference in GST to the ATO. Perhaps you could ask them …. In any event, if the end consumer is paying the GST, and Amazon is remitting that GST to the ATO, there isn’t an issue here – they’ve bought an imported eBook and the GST has been paid! Good on them!

    I couldn’t care less about international deminimuses on VAT … it’s good that Australia is one of the highest as it shows (up to now) that the exemption made sense; it makes Australia a better prospect for international sellers of low-value items, so better for the Australian consumer.

    The issue is more about will the change gather more in GST revenue than it costs the government to administer, -lus a number of other downsides that Sinc lists. If it doesn’t collect more than it costs, then the change is useless. My original post queries if their game plan is to collect more tax (eg. PAYG) as a result of the change to the exemption. You seem to think it won’t – your view is that it’s easy to implement. That only damages the case for the change since there will be no increase in PAYG collected (no more staff needed), a tax that with the exception of some major players can’t be collected, and a regulatory and administrative group within the ATO tasked to monitor this (ie. increased compliance cost).

    “New tax” isn’t in his list – in the title, yes, but not the list. It is a new tax because the items it applies to haven’t been taxed in this way before. Technically it is a change to the exemption, but I’m sure they’ll be new fines and penalties to go along with new regulations attached to the GST laws.

    But I reiterate, it is not “simply a change to the administrative de minimus for the imposition of gst on mported goods” as you say, as there will be many procedural, regulatory and administrative changes that go with it, for a change that unlikely to be a real benefit to our tax revenues or on Australians generally. I accept that your experience may be different when you import stuff, but your case is not the general case.

  98. Habib

    Presumably there are existing procedures in place to collect GST on couriered or posted goods valued at over $1000 coming into the country? Why is it impossible for something worth $900? Couriers are different to the post, they have their own in-house clearance cells (who aren’t terribly good at it). Post, anything over a grand has to be “entered for home consumption”, same as by sea or air, which means unless you’re either registered on the Integrated Cargo System and capable of absorbing a four year course + many hours of experience in one go, or you’re going to have to pay someone to clear it for you. Customs will trouser between $140-$250+ just to electronically process it, add more if multi containers, DAWR will swipe a variable amount if it has any sort of quarantine issues, then there’s the raft of other legislative leeches that can have a chop- try $3,500 for a refrigerant gas licence, and no naughty CFCs. then there’s duty and GST, the latter being levied on the cost of the goods + freight + insurance + any other charges prior to export. If it’s from a place with which we have an FTA and it falls in the ambit and you have the necessary certified supporting documents, it’ll be duty free. Putting sub $1,000 shipments into this already over-regulated and bursting volume of trade is possibly even too retarded for the Greens or One Nation to come up with. Takes a truly superior level of political palsy to achieve so little, for so much cost, and that really pisses off a large chunk of the electorate.

  99. notafan

    it’s good that Australia is one of the highest as it shows (up to now) that the exemption made sense; it makes Australia a better prospect for international sellers of low-value items, so better for the Australian consumer.

    And why precisely is that relevant. People sell to anyone from whom they can make a profit.

    I wish you had the same enthusiasm to make it easier for Australian businesses to sell to Australian consumers.

    I know! Let’s all buy all our stuff from international sellers.

    That’ll show our gosh darn government.

    You can like all Sinc’s complicated arguments all you like.

    I’m just pointing out it ought a fairly simple reduction of a administrative de minimus, that no doubt the government will make a dog’s breakfast of.

    Calling it a new tariff is just silly.

  100. Oh come on

    I don’t really understand the nitpicking going on here. The govt simply announces that all mailed imports are now subject to the GST. I think you’ll find a sizeable chunk of importers – particularly the big boys – will comply with little persuasion required, add the GST onto the final purchase price of goods or services purchased by customers accessing their servers via Australian ISPs or having their items shipped to an Australian address, and turn over the proceeds to the ATO. Seems to me like an easy – albeit not especially substantial – additional revenue source. Any ATO effort to enforce the new ruling would be targeted at convincing holdout importers of some volume to comply, rather than the expensive and counterproductive detection of improperly taxed individual sales.

    I have no idea really but I imagine it’d be a simple matter to levy the GST on, say, 50% of currently untaxed goods and services coming into the country by simply changing the rules. A good deal of importers would soon comply. The ATO issues a few ‘friendly reminders’ to non-complying importers, and that number jumps to, say, 70%. Not worth chasing down the remaining 30%. All in all, a nice little earner – emphasis on ‘little’ – that I think would cost a lot less to implement than some here believe.

  101. Habib

    ………………rather than the expensive and counterproductive detection of improperly taxed individual sales. You really don’t understand this government, do you? They make Frank Spencer look co-ordinated, coherent, and an intellectual acme all in one. In this case, the Freudy’s done a whoopsie on the carpet. Hmmmmmmm.

  102. Oh come on

    Habib, there is that, yes. I can certainly see the bell-ends in Canberra not being satisfied with 70, 60 or 50% of OS items valued at less than $1000 imported into Oz being subject to the GST with minimal effort so that the change is comfortably revenue-positive. Oh no, those dummies won’t rest until close enough to 100% of taxable imports are taxed, even if this means spending $20 to collect each additional $1 in foregone GST revenue.

  103. The BigBlueCat

    And why precisely is that relevant. People sell to anyone from whom they can make a profit.

    I wish you had the same enthusiasm to make it easier for Australian businesses to sell to Australian consumers.

    I know! Let’s all buy all our stuff from international sellers.

    People buy whatever they want from whoever and wherever. Price is pretty important generally. As is convenience.

    I do have the same enthusiasm regarding other regulations but that is not the question here. And I’m not advocating buying everything from overseas … that is a plainly silly proposition.

  104. True Aussie

    You don’t understand how the GST works, do you?

    You are an idiot. This whole thread is a discussion about how imported items below 1000 dollars don’t incur the GST. If company A, a foreign company sells the same item as company B, an Australian company, and the item is not worth more than a thousand dollars then the foreign company has a pricing advantage. Do you understand it now?

  105. John Angelico

    From the Submission Exec Summary:

    Currently imports into Australia purchased by Australian consumers are liable for GST payment
    at the border only if the purchase exceeds $1,000.

    And from here all the other errors stem.

    NO, NO, A THOUSAND TIMES, NO!

    The GST applies to all transactions. But there is a collections policy relating to informal entry goods where the total to be collected is less than $A100, such that Customs & Border Security (whatever the hell they are called this week) do not attempt to collect as the cost of collection exceeds the value to be recovered.

    It has long been recognised in Australia, however, that at a sufficiently low figure, the cost of
    imposing a tax at the border on low value goods is uneconomical, as, at some point, the cost of
    collection exceeds the revenue collected. The Productivity Commission (2011: 169) found that “In
    most scenarios estimated, total collection costs would still exceed additional revenues or generate
    net efficiency losses for the community”. In this context, the Bill is structured to relieve the cost of
    collection from the Australian government. To do so, it places an obligation on foreign firms doing
    more than A$75,000 worth of business with Australian customers to collect GST on behalf of the
    Australian government for their transactions with Australian customers. Overseas firms will be
    required to “register for, collect and remit” GST to the Commonwealth.

    The GST may be the largest portion of the total but it may not be the only component. There are still duties, charges, fees and so on (some above have commented on fumigation fees or charges for testing timber). Will the government relieve itself of the burden of collecting those other costs as well?

    So this Bill uses one complete furphy to impose a new tax on “internet transactions” – yet another furphy from the Ministry of Truth. If they get away with this one, they may try a new tax on “overseas fax transactions” or “international telephone transactions”. Where will it end?

    Yes, this Bill is a wicked imposition from a government that doesn’t deserve the title, run by a bunch of idiots who refuse to do the logical thing and cut spending. But let us fight the case correctly, not according to Gerry Harvey, thank you!

  106. John Angelico

    True Aussie #2352103, posted on April 11, 2017, at 8:01 pm

    You don’t understand how the GST works, do you?

    You are an idiot. This whole thread is a discussion about how imported items below 1000 dollars don’t incur the GST. If company A, a foreign company sells the same item as company B, an Australian company, and the item is not worth more than a thousand dollars then the foreign company has a pricing advantage. Do you understand it now?

    TA, you are wrong. Show us in the GST legislation or regulations the figure of $1000 as an exemption to the imposition of GST.

    See my previous post (and an earlier one this week, and earlier ones every other time this bloody stupid and wrong idea of Gerry Harvey’s gets a run).

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