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No GST relief in Australia or NZ until 2016

Western Australia has stalled moves to reduce the $1000 threshold on GST for privately imported goods as a negotiating ploy to increase the state’s slice of the GST pie.

Mike Nahan:
WA Treasurer Mike Nahan: ‘Not interested in WA paying more for online sales…’

While consensus between the state and Federal governments is tantalisingly close, the intransigence of the WA government has stalled  any decisions on the issue, with change unlikely before July 2016 at best.

The Australian retail industry is effectively being used as a bargaining chip. At stake, according to an Ernst and Young report on behalf of the National Retailers Association, is over 30,000 retail jobs and GST revenues of up to $1 billion per year.

Former WA Treasurer Troy Buswell admitted the WA government was holding up moves to level the playing field between the Australian retail industry and overseas retailers so as to force the Federal Government’s hand on allocating a greater proportion of GST revenues to Western Australia.

There were ‘very few points of leverage in the GST debate’ he told the AFR in January this year. ‘This [the Low Value Threshold] is one and we intend to leverage that for all that we can, to try and get a fairer outcome for WA.’

Troy Buswell’s replacement as Treasurer, Mike Nahan has adopted the same hardline negotiating position.

“I’m not interested in WA paying more for online sales if the vast bulk of that money goes to the Eastern States,” he said in March.

WA receives less that 40 cents in the dollar of GST collected in the state.

All other states, led by NSW, are in favour of lowering the threshold, and the Federal Government is willing to move once there is unanimity between the states.

However, in COAG meetings in March and once again in September they failed to agree.

‘At our last meeting in March, the Commonwealth agreed to a request from the states collectively to further explore options around lowering the value at which GST is applied to the importation of goods into Australia,’ Federal Treasurer Joe Hockey stated in a September 19 press release. ‘Currently the threshold is $1000. States indicated today that they had not agreed a preferred workable approach on this issue. The states may choose to raise this as part of the Tax White Paper process.

– If this were the case, there would be no possibility of the threshold being reduced until the 2016/17 Federal Budget – July 2016 at the earliest. The Tax White Paper – which will also look at increasing the GST from 10 percent – is not due to be tabled until the end of 2015.

NZ moves also stalled

Although the online GST threshold is only NZ$400 in New Zealand, it is still relatively high compared to other countries, and NZ retailers will also have to wait until 2016 to see any relief, according to a report in NZ retailers website, Retail News.

With a GST rate of 15 percent, New Zealanders have added incentive to avoid the tax by buying offshore.

However, the NZ tax office wants to wait for an OECD review of international tax issues to be finalised to ‘ensure any New Zealand initiatives are guided by the approaches recommended by the OECD.’

‘This timeline will push into 2016 any relief for Kiwi retailers from the current GST loophole that exempts goods purchased from offshore websites valued under $400 from GST,’ Retail News reported.

The silver lining – for Australai and well as New Zeqaland – was that the OECD is likely to recommend that international online retailers be required to collect GST for overseas sales.

Industry association Retail NZ estimates that NZ is losing up to NZ$400 million a year in foregone GST revenue. Retail News reported that online spending at offshore sites is up 28 percent on October last year.




  1. ROBBO ROBBO December 12, 2014

    its all the same old BS.
    manufacturers ripping of Aussie retailers, retailers copping it in the neck from customers getting pi55 off with cheaper online prices……
    case study
    i wanted to buy a sony RX10011
    should be a easy task for me….but no
    RRP aus$799…..
    Mates rates from old employer Aus$729
    hong kong Aus$569 inc air express
    Delivery time …6 days by toll express
    this is why you are pushing S@#$ uphill and no one in gov and manufactures give a dam
    by the way the camera is stunningly good!

  2. Hardwork Hardwork December 24, 2014

    Completely agree that the current situation frames local retailers in a very negative light as customers cannot see the reason for the price disparity between grey and white prices.

    However Id also like to point out that the current situation also places local distributors in a negative light as they bear the brunt from retailers.

    Following on from this manufacturers in turn bear the brunt from distributors.

    As a person familiar with each part of the chain it is my experience that no one is price setting to create these price differentials but differences of 15~20% are impossible to avoid even when the manufacturer sells in at much lower prices to the australian distributor.

    * Price into asia is significantly higher than into australia but this is more than offset because bundles are broken up and bartered with pieces sold by grey retailers at between -5% and 5% margin.
    * Australian distributors / subsidiaries must invest in brand + tradeshows + rebates + service and promotions
    * At the retailer level 20~30% margin is required (product category dependant) compared to 5% for a grey retailer.
    * Then there is 10% GST on top.

    In summary, Im sure that each part of the value chain supports GST levied on goods an the reduction in grey products so that retailers, suppliers and manufacturers can create more sustainable business and invest in their brand and products, thus increasing consumer awareness for their products and the category.

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