While time moves inexorably towards the July 1 date from which GST will, according to the latest information from the Federal Government, be applied in Australia to low-value private purchases from overseas retailers, New Zealand has opted not to make a similar move – at least this year.
The NZ Customs Service screens incoming parcels to make sure the right amount of tax is paid on imported goods. When GST and duty is less than NZ$60, fees are waived.
‘Our GST system is a lot simpler than the Australian GST system. We have a flat rate, very easy. We know that GST can be collected by companies overseas, we have the Netflix tax … we will be watching what happens with Australia … and I’m assuming that the tax working group will also be keeping a close eye on what happens over there,’ said NZ Revenue Minister, Stuart Nash.
He said he was unsure if Australia’s move to GST on lower value goods would influence New Zealand, and wouldn’t confirm whether changes could be implemented next year.
Meanwhile, over here…
While there has been no publicity for the initiative, it appears that Federal Parliament will attempt to implement its preferred ‘vendor model’ for GST collection, following a Productivity Commission inquiry into alternative systems.
There will be two GST ‘regimes’ from July 1: ‘Goods under $1000 will be subject to GST collection by the retailer or electronic distribution platform, whereas Border Force will need to ensure GST and duties are paid at the border for goods over $1000. Given the lacklustre record of Border Force in enforcing Australia’s customs rules (eg, illicit drug imports), it probably will be easier to dodge GST on high-value imports than on low-value imports!
The legislation includes an obligation for electronic distribution platforms, such as Ebay and Amazon Marketplace, to play the GST collection role.
Ebay has threatened that it ‘may’ stop Australians from using its platform to purchase from overseas retailers: ‘Regrettably, the government’s legislation may force eBay to prevent Australians from buying from foreign sellers,’ Ebay’s vice president and managing director for Australia and New Zealand, Jooman Park, hissily wrote to the Federal Government. ‘No tax would be paid to Australia and none would be owed. It would raise no revenue, deny Australians access to choice and lessen price competition.’
After the change was delayed from July 1 2017 to this year, he stated: ‘…we are not sure we will end up making the decision to create this tax collection capability. We run an $80 billion business based on one global platform. Your requirement is almost the same as just developing a separate Australian site.
‘It will cost a lot to invest, and second, under the bill we are subject to the financial risk — if our sellers refuse to pay GST, we are liable for that. We don’t understand why we have to take that financial risk.’
In its submission on the matter, Amazon stated, ‘The bill imposes an administrative burden on sellers and electronic distribution platforms which will create an inherent disincentive for them to comply.’ Even though Amazon Australia is now operating onshore, it will continue to oppose the vendor model as it will be required to collect GST on behalf of its Amazon Marketplace vendors. And compliance creates an unwelcome international precedent.
James Hudson, director government relations at Alibaba, told The Australian in an interview last year that it ‘may not be able to be applied to Ali Express. If that’s the case we would have no choice but to geoblock Australian users from using the platform.’
According to the ATO, ‘[Overseas] businesses that meet the $75,000 registration threshold will need to take action now to review their business systems to ensure that they are able to comply. (Although there is no information provided on exactly how to achieve this.)
The July 1 changes:
– Make supplies of goods valued at $1000 or less at the time of supply connected with Australia if the goods are purchased by consumers and are brought into Australia with the assistance of the supplier subject to tax;
– Treat the operator of an electronic distribution platform (EDP) as the supplier of low value goods if the goods are purchased through the platform by consumers and brought into Australia with the assistance of either the supplier or the operator;
– Treat re-deliverers as the suppliers of low value goods if the goods are delivered outside of Australia as part of the supply, and the re-deliverer assists with their delivery into Australia as part of a shopping or mailbox service that it provides under an arrangement with the consumer;
– allow non-resident suppliers of low value goods that are connected with Australia to elect to access the simplified GST registration and reporting system.
COMMENT: What a shame it would be if Amazon and Ebay geo-blocked Australian consumers rather than respect the legal framework for operating in the Australian marketplace. Still, if they feel that’s what they really, really need to do, I guess most GST-charging, competing Australian retailers would miss them, but understand the dilemma they face. You gotta do what you gotta do!