The GST (Goods and Services Tax) legislation proposed by the Australian government to see GST extended to all goods bought overseas has been pushed back until July 2018, this has been dubbed the “Netflix Tax”. It’s a good idea to be aware of these import tax changes and prepare accordingly as it will affect business owners and individuals differently. The two main changes you need to be aware of are a new tax on low-value imported goods and a new tax on digital goods and services.
What is the Netflix Tax?
In July 2018, the Federal Government will almost certainly apply GST to all electronic goods and services supplied into Australia, as these are currently not subject to GST. This “Netflix tax” applies to all intangible supplies such as music purchased online and digital streaming services. A 10 per cent GST will also be applied to imported goods worth less than $1000 as currently overseas products that cost under $1000 are GST-free.
International vendors who sell to Australians and have an annual turnover of over $75000 are required to register and charge GST. This previously only applied to international vendors who sold products worth over $1000 each.
Why is this happening?
The absence of the GST on imported digital goods and services has meant that the government is missing out on tax revenue and Australian suppliers are disadvantaged compared to those overseas. For example, companies like Netflix have the upper hand over Australian services such as Stan. The Netflix Tax is a response to the continuous growth of online shopping and a way to ensure that both Australian and international low-value goods are subject to the same tax regime. This GST will help to create a more equal playing field between Australian and international products.
How does this affect me?
This GST will also be imposed on all intangible goods and services, which means that you will be taxed on anything you have paid to download or stream such as movies, games, e-books, magazines and streaming services as well as consultancy and professional services performed offshore for Australian customers.
As most online stores are not Australian and the majority of goods purchased online are under $1000, you should expect to be paying 10% more for all products bought online from overseas retailers from July 2018.
Does this apply to eBay?
Online retailers are one of the most affected from this tax. EBay will need to pay the new tax on goods sold to Australians and the GST will apply to fees on eBay.com.au. Businesses registered for GST will not be affected by this change if you register your Australian Business Number (ABN) with eBay, however you may see an increase in eBay fees.
The cost of the tax should not be passed on to customers until the bill has passed which is estimated to be in July 2018. Australian consumers can expect to start seeing price increases around this time.