Paying GST for online shopping

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Currently Australians can purchase items online from overseas retailers GST free, provided they stay below the $1000 threshold. This means that overseas retailers automatically have a 10 per cent discount advantage over local businesses, and the Australian retail community has finally had enough.

Bernie Brookes, CEO of Australia’s biggest department store Myer, along with Harvey Norman CEO Gerry Harvey, joined together yesterday to put political pressure on both federal and state treasurers to address this problem. The $1000 threshold has been a loophole detested by domestic retailers for years. Now finally Australian retailers have now reached the point where they say they may be forced to ship in products via New Zealand to match the unfair price advantage given to foreign websites.

Federal Treasurer Joe Hockey will today meet with state treasurers to discuss the loophole, amongst other issues. Local retailers are hoping that they will decide to lower the threshold significantly, or to remove it completely, putting foreign online retailers on even footing with local businesses.

Mr Brookes explained that because of the loophole, “over $800 million [is] going amiss that could be put into the state governments for schools, for extra police and to be able to support the local community.” He said that if the government did not take immediate action over this issue, it risked local retailers exploiting the loophole themselves. “Somebody like Woolworths or Coles, us or David Jones could supply the products out of New Zealand and supply the product for 10 per cent less, and that could well happen if the government doesn’t close the loophole.”

Read more from the Sydney Morning Herald 


Opinion: Having your cake

I’m a big fan of online shopping. You don’t have to leave the house, carry heavy bags or suffer the disappointment of shop after shop not carrying the item you need. And, best of all, online shopping is cheaper, especially if you buy from overseas.

Yet, every time I click the ‘Buy’ button, I feel a little pang of guilt. Guilt that I am not supporting Australian manufacturers, companies or local businesses. That my money is supporting someone else’s economy. Not just occasionally, either – most of my shopping dollars are spent online and overseas. It’s not a good feeling.

One of the biggest arguments the previous government made against collecting GST on items under $1000 was that it’s simply too difficult to manage. There is the issue of how to collect the tax, and the cost of determining how much tax should be paid on each individual parcel. And yet Europe, the UK, Canada and the USA all seem to manage just fine when it comes to collecting tax on items purchased online from other countries.

As an online shopper, I support lowering the GST threshold on online purchases. Yes, I know this means my shopping is going to go up by 10 per cent. Will it stop me shopping online? No. Online shopping has two important points in its favour which are unrelated to price. First, Australia simply doesn’t get the range of products enjoyed by other regions such as the Americas or Asia. Shopping online gives you access to a wealth of clothes, gadgets and gifts you wouldn’t otherwise have on offer. Secondly, it takes the guesswork out of the equation. When you want a very specific item you could spend all day running around town trying to find what you want. Or you could type it into Google and find exactly what you are looking for in seconds. I’m willing to pay 10 per cent more for that level of convenience.

Local shops, shopping centres and markets are great if you want to browse. But when you want something specific and you need to find it fast, online shopping wins the race every time. I think that Australia’s treasurers would be surprised by how accepting Australians will be of a lowered (or abolished) GST free threshold on imported goods. Keeping the convenience of worldwide online shopping while still supporting Australia’s economy? I think that’s called having your cake and eating it too.

What do you think? Is the whole point of online shopping that you avoid GST? Will you still shop online if the prices stop being so much cheaper? Or do you think that lowering the $1000 threshold is a good idea?

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Total Comments: 47
  1. 0

    GST is a consumption tax on goods and services consumed in Oz.
    Play fair, charge the tax.

    • 0

      1. It would cost MORE to collect the tax than the amount collected – ordinary Australians will simply be denied a cheaper option & have to foot the bill to ‘stop’ that cheaper option?????
      2. It is not online shopping that has damaged the small retailer, it is the manipulation of retail rent costs by conglomerates & real estate agents. Even though retailers they can obtain products cheaper these days because of the AU$ being high & products being made VERY cheaply in China, they are paying exorbitant rentals that greatly impinge on their ability to reduce prices. Their ability to compete is hugely inhibited by these unfair & draconian practices of conglomerate landlords
      3. What happened to the concept of Laissez Faire (Free Market) – obviously only okay when business MAKES money…. otherwise get the government to impose taxes and more rules…. even if it costs the government to do it…yes?

    • 0

      Cuckoo! Cuckoo! Thought I heard a bird. No its Mussi.
      The reason everything (including rent) is more expensive here is because our labour costs are too high. Thanks to the unions and labor governments

      GST already applied for items above $1,000 so the systems and processes are already inplace.

      Do you sometimes here voices in your head Mussi ?

  2. 0

    I would rather not pay more if The GST threshold was lowered but it is inevitable and I believe necessary.

    Convenience of online shopping alone is worth 10% and you’ll still find most goods cheaper than in the stores after the GST hits. So my shopping habits will not change under new rules.

  3. 0

    I agree that there should be a level playing field, but of course the 10% will not be all you pay. Comments from Choice suggest you may have to pay up to 60% more for an item as you have to take into account the cost of applying and collecting the tax. Big players like Gerry Harvey have been pressing the Government for this for a long while, so in reality who would benefit the most I ask.

  4. 0

    At last something that is not really political but can affect those of us who shop on line overseas. The big retailers are pushing for this tax to suit their own purposes. Make your thoughts known to them and to your local member.

    If on shore retailers treated the consumer fairly without adding massive on costs to their product we would generally shop locally. This is not the case.

    The massive two conglomerates have done everything to kill the small business and the small family farm supplier so that they have a monopoly on purchase and sales and you as the supplier or customer must like what I do.

    I wonder how applying a GST on imports fits into International Trade Agreements?

    And do you know what, I do not care what happens to the conglomerates or the Gerry Harvey’s of this country, They have had it too good for too long.

  5. 0

    So we choose to buy overseas sourced products over the internet and wonder why Australia’s balance of exchange is skewed in favour of countries over seas? I wonder why this is. It is nice to see all the patriotic comments from those who contribute to this forum, but are these same people putting their money where their mouths are when it comes to spending their money?

    • 0

      i hope you drive a holden and all your household appliances are aussie made.
      get serious.

    • 0

      I do not think this is necessarily true. I buy stuff from local online stores that are heaps cheaper than buying from local retailers for the same thing. I have also bought from USA and UK the same things at much reduced prices. We have been getting ripped of by the gongloerates far to long.

    • 0

      I do not think this is necessarily true. I buy stuff from local online stores that are heaps cheaper than buying from local retailers for the same thing. I have also bought from USA and UK the same things at much reduced prices. We have been getting ripped of by the gongloerates far to long.

    • 0

      Just about everything we buy in AUSTRALIA is from overseas, wally.

      That is where the retailers get their products from – OVERSEAS. So buying in Australia or online MAKES NO DIFFERENCE – our NON GOVT debt rises irrespectively.

      However, if a small retailer has to pay exorbitant & draconian RENTS to market manipulators who undertake unfair practices, they cannot compete and reduce their price as they would normally do.

  6. 0

    If they want to charge gst when you buy stuff overseas,does that mean big firms like harvey norman will pay gst on the thousands of goods they import into the country ,they buy it cheap and double the price to the consumer and the consumer has to pay the gst ,while they make heaps without paying gst for importing their products.that is unfair

    • 0

      Totally agree apache41 – that is EXACTLY what they do and they don’t like the consumer buying from overseas as we cut out the middle man i.e. THE BIG CONGLOMERATES who buy everything dirt cheap and charge us a fortune for it. Paying GST on overseas purchases will not stop people buying online – I am OK with paying it – it will still be cheaper. My issue with all of this is that the cost of administering this RIDICULOUS proposal will far outweigh the amount of GST collectable. Who are they trying to kid – it won’t help small retail business in Australia. It will only benefit the big three COLES, WOOLIES AND HARVEY NORMAN who is we aren’t careful will be our ONLY option for buying good in this country before long.

  7. 0

    Maybe Aussie retailers need to fight fire with fire…..offer online shopping at REASONABLE and/or COMPARABLE prices to combat the overseas purchases. I understand that a lot of their costs are wages, rent etc but if they had an online shop these costs are cut out to a degree and they could offer better and cheaper prices. This is the only way you will encourage people to buy on shore.
    Goods in Aust are just way too expensive compared to what you can buy online for the SAME quality. Most of us cannot afford to go and buy a dress for $150+ when you can buy the same item online for less that $50.
    Recently I spoke with some people from a Scandinavian country – who have a well documented high cost of living – and they were absolutely amazed at how expensive everything is here in Australia. They said if they had known they would not have come here in the first place – speaks volumes when you think about it!!!!

    • 0

      I had a similar experience with a Swedish couple I met in Sydney a couple of weeks ago who were on a tour here. They loved Australia but said it was “very” expensive.

  8. 0

    The big business who are pushing for the GST to be applied to goods purchased from overseas remind me of the attitude that Telstra had when there was total monopoly over telephone services. Now phone services are lots better because we now have choices and Telstra has prospered…..

  9. 0

    People will still buy online even if the 10% GST is added because if an item costs $100 here and you can get it online for $50, its only $5 more and still save $45, simple.

  10. 0

    Hi Jag. My apliances are so old and decrepit, they are/were Aussie made. Too bad about the computer, tho. I also agree with you about charging GST on purchases made overseas thru the internet. It is only that the devil is in the detail as how to collect the gst from these sales and what the minimum amount would be for the gst to kick in. Or, shock horror, bring back tariffs on overseas made goods. and to hell with the UN and their sanctions.

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