The Turnbull Government plans to extend GST to imported online goods valued under $1000, effective from 1 July 2017 – a move Treasurer Scott Morrison claims will “establish a level playing field for our domestic retailers”.
However, the Labor Party has called for a 12-month delay to ensure that the legislation governing the policy is robust before moving ahead. From The Guardian:
[Labor] says the Coalition needs to subject its plan to a regulation impact statement, after revelations from Treasury officials it had failed to do so.
It has criticised the government for lumbering the Australian Taxation Office with a vague plan that appears unenforceable, warning it will likely cause “major disruptions” for businesses and families…
Treasury officials admitted the government’s plan was in breach of its own best-practice requirements because it had not been subjected to a regulatory impact statement…
Under the plan, the Coalition wants to use a so-called “vendor model” to force companies such as Amazon and eBay to collect the GST on online goods imported to Australia.
But Marisa Purvis-Smith, the head of Treasury’s individuals and indirect tax division, told senators the government had chosen the “vendor model” without subjecting it to a regulation impact statement.
Labor says the revelation means the government should not try to implement its changes on 1 July as planned… It also wants the government to seriously consider alternative models of GST collection, given the concerns raised about the vendor model.
Kathrin Bain, a lecturer in the School of Taxation & Business Law at UNSW, has also raised significant concerns about the proposed legislation. From The Conversation:
[The draft legislation] unfairly imposes GST on goods purchased from overseas sellers, that wouldn’t be subject to GST if purchased from an Australian seller.
The government also hasn’t cleared up how the collection will be adequately enforced. Without appropriate enforcement, collecting more revenue from this tax seems unlikely…
The new law will also apply to online marketplaces such as eBay and “redeliverers” – businesses that forward goods to Australia from overseas companies. For goods purchased through an online marketplace, the marketplace rather than the seller will be treated as the supplier. Similarly, if low-value goods are delivered to Australia by a redeliverer, they will be considered to be the supplier for GST purposes.
While extending the GST to these goods is meant to level the playing field between overseas and Australian vendors, treating the online marketplace or mail forwarder as the supplier of goods is inconsistent with the treatment of domestic transactions…
For Australian vendors who sell items on eBay, it’s the individual seller who is responsible for collecting and remitting GST on products they sell (if they are required to be registered)…
EBay has gone as far as stating in their submission that: “Regrettably, the Government’s legislation may force eBay to prevent Australians from buying from foreign sellers”. This is because they would not be able to comply with the requirements imposed under the new legislation…
Despite the legislation being intended to come into effect on 1 July of this year, it is still unclear how the new system will be adequately enforced.
Labor is spot on. The Coalition should delay the implementation of its online GST plan until it has:
- Undertaken all the necessary consultation with stakeholders;
- Thoroughly examined the alternative options for collecting GST; and
- Prepared a thorough regulatory impact statement, including a proper cost-benefit analysis.
This is how responsible government is supposed to work.
