August 14, 2015

GST Free Online Shopping May Be Over

Australia’s days of GST free online shopping maybe numbered. What does that mean for the average consumer or business?

State Treasurers, along with Federal Treasurer Joe Hockey, will vote on the 21st of August to include the GST on overseas online transactions less than A$1,000 in the GST regime. Tax is currently only charged on all import transactions totalling more than A$1000.

The changes are still being discussed but it is likely that the new tax-free threshold will be reduced to only A$20. If this becomes law than anything above that amount will have the extra 10% added to the total.

This move is meant to make buying from Australian retailers online more attractive. While it may seem to help out local retailers, it is really only half the story. The benefits of lowering the threshold to A$20 are controversial.

The other side of the problem is that Australian consumers are getting hit with higher prices when purchasing many products locally especially IT products. A government inquiry in 2012 found that, “The Committee is aware that while regional pricing strategies may exist across many industries, they are particularly noticeable in relation to IT products, including those which are digitally delivered with identical content in different countries. In many cases prices are significantly higher than what might be expected as a consequence of any costs arising from delivery in the Australian market.”

This same inquiry found that Microsoft products were on average 66% more expensive for Australians than for their foreign counterparts, while games were on average 84% more.

Another 10% on prices for IT products purchased online is a comparatively small amount. This is food for thought as this debate into GST continues. While a new tax may seem to solve some issues, it may in fact only be a band aid for others, such as much higher prices for products set by the companies selling the products to Australian retailers.

As we become more and more dependent on technology and software from overseas what is the best way to keep prices fair for the Australian consumer?


Julie Dunmore

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