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Further doubt on cutting Australian e-commerce GST threshold

  • Dec 24, 2013 | Richard Asquith

Further doubt on cutting Australian e-commerce GST threshold

A new estimate on the amount of Australian Goods and Service Tax that would be raised if the current import GST threshold was dropped has cast further doubt of the value of such a move.  The new figures estimated any change would raise less than half the AUS$ 800m estimated by Australian retailers.  The follows a recent decision not to consider an Australian GST threshold cut for the time being.

Australian retailers want level GST playing field for foreign e-retailers

Australian retailers are worried about a stagnant domestic market, and the threat posed by foreign online sellers of goods to consumers.  At present, there is no GST charged on these foreign purchases provided the value does not exceed AUS$ 1,000 per package.  This compares to Europe, where most countries’ distance selling VAT thresholds are below €15 per package.

A report produced by the National Australian Bank claimed that a change to this threshold would raise less that AUS$ 400m. This would make it difficult to justify as the costs of administering the registration and regular reporting of foreign business would not be much less.  The principle area of dispute is the value of the lowest purchases.  The NAB estimates that over 90% of sales are for goods of less than AUS$ 100.  So any lowering of threshold would have to be below this amount to make a substantial difference.  This would then potentially mean a large number of GST registrations and tax returns to administer.  Although this may include large numbers of digital downloads.

It is likely that the campaign for the lowering of the threshold will quieten down as the Australian dollar has fallen.  The makes the price of online shopping from foreign website more expensive.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara