GST on online purchases doesn’t start till July 1, 2017

Treasurer Joe Hockey has been hesitant to provide a value of the potential income from regulation changes to GST for online goods, but ABC is now listing it at...

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Treasurer Joe Hockey has been hesitant to provide a value of the potential income from regulation changes to GST for online goods, but ABC is now listing it at around $350 million over the first two years after its introduction. The big news tonight is that the new change won’t be implemented until July 1st, 2017, or more than 2 years from now.

The Government is set to profit from overseas businesses supplying digital products and services to Australians, which currently don’t attract GST. It looks like physical goods bought online will still be GST free as long as they are less than $1,000 in value.

It’ll be to see if companies are able to restructure their businesses to continue to avoid these charges for consumers. There is a difference between an international company offering a service to an Australian customer, to a service that runs internationally that doesn’t block payment from international credit cards, like those from Australia i.e. pre-Netflix’s Australian launch.

What’s quickly become known as ‘the Netflix tax’ was confirmed in the federal budget tonight. After recently launching in Australia, competing streaming services complained to the Government that Netflix wasn’t charging GST, while they had to. Presto and Stan say it gives the international service an unfair advantage. Currently starting at $8.99 per month, Netflix is cheaper than Stan at $10pm and Presto’s combined TV and movie package of $14.99pm. With a larger catalogue, better device support and the highest quality available (up to 4K), price is certainly not the only reason Netflix is dominating here.

The detail of this policy is still yet to emerge, but it’s possible the government’s initial pitch of ‘billions of dollars’ has been toned down after realising the difficulties in implementing such a plan. Hockey hopes that new legislation will stop multinationals using complex schemes to escape paying tax, like the top 30 large businesses in the government’s radar.

The government will aggressively pursue those companies caught cheating, they will have to pay back double what they owe, plus interest.

More information at ABC’s winner and loser budget site.

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