You Won't Be Taxed For Buying Games On Steam. Yet.

Federal Government plans to install a tax on goods bought from overseas online retailers has been rejected by Cabinet Minsters.

Buying video games online is safe. For now.

The tax was previously referred to as the 'Netflix tax' and was set to add 10% to products bought online, whether they were virtual or not, in an attempt to create a level playing field between goods bought here in Australia — with the GST added — and products sold overseas to Australian consumers.

It was a move designed as a stop-gap solution. Currently consumers are only charged GST on products bought online if they cost over $1000. Meaning that smaller purchases, like video games or even video game consoles, are exempt. The idea was that the tax would have been applied to digital products as well, and on services like Netflix or Steam.

It was a popular idea with local retailers, who want to remain competitive with online retailers but remain burdened with the GST.

But Minsters have reconsidered, the idea being that a longer terms solution will be created with regards to the GST. Most likely that will involve lowering the afore-mentioned $1000 limit on goods bought overseas.

“The idea that a 10 per cent price differential was going to sway people one way or another was a bit misguided, but it’s something the local retail lobby often puts out there,” said Matt Levey at Choice, speaking to News.

“But we think it’s fair enough to say the GST should apply equally. The problem was all the associated costs and red tape that would come with applying the GST in places where Australia doesn’t have tax jurisdiction.

"Some of the propositions would have simply seen the retailers passing on the collection costs. You can’t load that onto consumers.”

Government backdown on online shopping tax [News]


Comments

    yet it won't stop publishers jacking up prices for aussies ;) at least it can't get any worse.... right?

      Love going on Steam and seeing we get the Aussie tax of $75 for GTAV and that the $75 is in US.
      Either charge s $60us or $75au. Instead we get $95au. What a joke.

        price has dropped? god damn it, i payeed $102AUD

    I don't really see how they can impose a tax on digital products bought from an overseas company. How to they actually enforce that? You can't.

      Many of these overseas companies have local subsidiaries to lean on (e.g. Apple, Microsoft, Sony, Google). Valve is probably the exception here, but will probably have some kind of local presence eventually if it continues its push into hardware.

      For physical goods, it is probably even easier. Customs could simply impound every parcel sent by e.g. Ozgameshop, sending a letter to the recipient telling them that they can collect the parcel after paying 10% GST plus a handling fee. The retailer would probably then choose to collect GST on these purchases if it meant they'd get through without delay and additional cost.

        I remember when they first started talking about this and someone did the maths that would only be add something like maybe a couple hundred thousand to the budget to put a tax on parcels under $1000 once you got around the cost of actually doing it. I wish I could find that article again.

          The current $1000 threshold is based on an estimate of the point where the money collected through GST surpasses the cost of collection, yes.

          The thing is that the cost of collection goes way down if the government has the cooperation of the foreign retailer and has them collect it at checkout. If they can get that kind of cooperation, then the added cost to non-compliant retailers might be considered a benefit.

          This kind of arrangement isn't without precedent. Within Europe, it isn't uncommon for online retailers to collect tax on behalf of the customer's government for cross-border sales.

            Getting foreign stores to collect GST still requires enforcement though. Right now only packages with a declared value over $1000 are checked for GST receipts going through customs, lowering the threshold will still require considerable extra enforcement costs regardless of who's actually doing the collecting, otherwise the law has no teeth and stores will just ignore it.

            That being said this is still pretty much just a deflecting tactic by the government on the real issue of these international companies actually *avoiding* tax through various loop holes.

            Of course the companies would be happy to co-operate. It shifts the cost to the consumer paying the tax as opposed to the companies themselves actually *paying* tax.

    I'd bet the moment a "Netflix GST" is passed brick and mortar prices go up.

    Why even buy from Steam? Better off buying from GMG. They are usually cheaper and always have a 25% off code. Not including Steam Sales I don't think I've ever bought anything off it.

      A lot of Steam games aren't available on GMG, and I've found quite often their coupons don't work once you get to the checkout process with new releases and special editions. I ended up getting Pillars of Eternity from elsewhere because none of their three active coupons at the time worked with the royal edition.

      I use them when they have the game I want, are cheaper and their coupons work, but in my experience that's less than half the time.

      Last edited 05/05/15 11:34 am

    Pretty sure the Australia Tax is already bad enough without Australia actually applying tax to this situation.

      This is my view. Let us buy games as a direct conversion from USD to AUD then apply a GST. Inflating the USD price by an extra 30-50% before even performing a currency conversion is already enough of a "tax", thank you very much.

        Damn right. I'm happy to pay tax, but I'm not happy with what happens to prices once sellers feel 'burdened' by the regulations.

        To be fair the government doesn't get a cut of that Tax.

        What I've always wondered is if Steam charge US dollars but enforce local prices why can't they support local prices. Even a rough estimate would be nice.

      Especially since on Steam, they often simply take the AUD RRP and change it to USD - so not only do we pay more than the US does, we pay 30% more than buying it off the shelf at RRP in Australia. Add another 10% to that and we'll be approaching a 100% premium over the US price (where we aren't there already).

      eg. US price - US$60. AU prince - $A$80. Steam price - US$80 or ~AUD107. Add 10% to that and we get AU$117.

      I'm guessing this is a per-publisher policy, not a Valve thing as such, since it's only done for a handful of major publishers (cough, Activision, cough).

    When things are often so much cheaper online, often 20-30%, adding a 10% tax to it isn't going to suddenly make people go to a local retailer. Sure the government gets their cut, but it won't do anything to help the brick and mortar stores.

      IMHO it's just a deflection tactic...

      They can't get international companies to play ball w/ prices or paying taxes. So they tax the consumer instead and go "hey guys we got them to pay after all!*"

      * them being the consumer whilst the companies still get to charge exorbitant local prices now with added GST!

    So are they telling me, that overseas company like EA charging full Australian RRP for digital release with the same price as brick and mortar store did not pay tax?

      It depends if Origin sales are routed through their Australian offices or not. I couldn't find EA Australia financial reports from a cursory search but I'm sure they're out there.

        @letrico Further to this, just checked a recent receipt I have from Origin and the note "VAT/GST is charged at 10.0%" is at the bottom, so it appears Origin sales do already acrue GST, which means they're registered through their AU offices as Australian sales.

      From what I've seen from EA and Steam, it's on their receipts IF it has been charged. Some EA products do, some don't. For example, I've been charged GST on Bioware points, but not on Dragon Age browser-game (by Failbetter games who are awesome) currency ('dawn').

      Australian tax law is that if you charge a customer GST, it has to be marked separately on the receipt.

      Digital sales are a fucking rip-off thanks to retailers demanding that online prices not be cheaper than physical sale prices, but the reason the publishers play along isn't JUST because they are afraid that retailers will take their ball and go home.
      I mean, that's there... but they don't actually mind.

      Take two products: one digital, one physical.

      The physical product gets bought by a wholesaler and retailer for $X.
      The retailer ends up paying $Y for the distributor, and $Z for their own mark-up to pay for staff and rent and a small margin of profit.

      The customer pays $X+Y+Z.
      EA gets X, the distributor gets Y, the retailer gets Z.

      The digital product gets sold on Origin, owned by EA. So effectively, EA gets X, Y, and Z all to themselves.

      They're not exactly crying about it.

        Australian tax law is that if you charge a customer GST, it has to be marked separately on the receipt.

        It's not only that. If you do a bit of further reading (it's been a while so sorry in advance if this has been changed) there are many circumstances where the GST doesn't apply.

        The example I recall is this (and we'll omit Microsoft et. al.'s shafting ease reading).

        Say you have a company overseas and that company hires a contractor in Australia. When the work is done, the contract is paid his or her income.

        Like anyone else that income is taxed depending on the bracket (minus deductions) and other levies applied if in the higher brackets.

        However, as the good and/or service was consumed by an entity outside of Australia it is considered an export (from my understanding) thus is GST-exempt.

        Some may say "well, big businesses get a break so why not the small ones?"

        This is where my concern comes when you look at the big picture.

        If a move to apply GST to imports comes up again and is successful, will this set a precedent that will see exports also taxed?

        Despite what Gerry Harvey, Russell Zimmerman and now the new assistant treasure (who Hockey is still ultimately responsible for) are planning, the effects of GST on imports is not insular and I think can cascade and do significant damage to both imports and exports.

        At the heard of the matter (getting off topic so I'll be quick) the tax system here as well as dated is full of loop holes so any new tax even with the best of intentions is easily circumvented.

        Last edited 05/05/15 1:45 pm

          I'm not sure any of what you said actually applies. In the general case, imports are already subject to GST: we just happen to have an exemption for low value imports.

          The reason exports aren't taxed because they are generally taxed in the country where they are consumed, and we don't want them to be taxed twice (that'd make them less competitive with local products).

          As far as services provided by contractors go, it seems unlikely that they'd be under the low value threshold. So any change here is unlikely to affect them.

      They didn't pay GST tax, Income tax would still of been applicable however.

    I don't have a problem with paying GST on steam purchases (or Netflix or any other digital service). I DO have a problem with Steam charging AU prices in US dollars.

      Regional pricing is dictated by publishers, unfortunately. They're the ones that need the pressure put on them, it's not a Valve/Steam issue. Valve could try to block that type of price discrimination but all that would do is push the offending publishers onto other platforms (eg. Origin).

        Or just charge us in AU, not US.

          I'd rather they stayed with USD, honestly, it's still a better price after currency conversion than AU RRP.

        You miss the point. At one point you could go to EB and buy CIV:Beyond Earth for AU$89. On Steam it was $US89 ... which worked out to be AU$115. WTF? Charge in AU$. Not $US. That way at least people can see what they are being charged.

          I believe I got your point, I'm saying the issue isn't caused by Steam. Steam doesn't do regional pricing by default, the publisher has to set it explicitly. If a product is being charged to Australians at USD$89 when the US version is USD$59, it's because the publisher set that price for the Australian market. That's the publisher's issue and they're the ones that should be pressured to fix it.

    Every time a retailer complains about not being able to compete with online sales, an oblivious retail customer says "I should check out these cheap online prices".

    Isn't the reason games are so expensive right now is because of consoles. Like Having to stock EB games and shit so they need to have the price higher whereas on PC there is no CD and Box and shit. So when they stop the mutual agreement to keep prices the same and start selling at reasonable prices because it'll be online then I wouldn't care about a Tax. But you know that will never happen. More money for them.

      No? Because just like you can buy a PC game from say, Steam OR on 7 DVDs from JB (I'm looking at you GTAV), on a consol you can by a game disk or download from PSN or whatever.

    So the Australax plus the Australia Tax

    This is pretty much the Marketplace Fairness Act that exists in the US. Hopefully it will end up with similar exemptions and loopholes if they ever try to pass it in Australia.

      Fortunately that particular act only applies to US stores selling to US customers online, though I'm sure they want to use it as a launch bed for further changes. It's technically infeasible to require all foreign stores to collect taxes for every country that happens to want a cut of the pie. Most online stores would just choose not to sell to Australia, and intelligent Australian customers would just purchase to a freight forwarder and have the product sent here under the customs classification of "gift" instead.

    This tax/threshold is being trumpeted as a way to discourage online purchases from overseas and get people supporting in-country retail, whether online or b&m, so used items and any items that are not available in retail stores in australia should be exempt (ebay purchases etc).

    What's funny is that there would be an enormous cost to set it up anyway, using money the government we know doesn't have. Experts have claimed the tax will pay off the implementation cost reasonably quick due to the 'growing' online overseas purchases, but the tax will reduce the amount of people doing it, so the whole thing contradicts itself.

    I would have though you were paying for a 'service' when signing up for a Netflix account. That's the 'S' part in GST.
    You're not getting a product or a good that you own.
    Much like going to the cinema. You're paying to see the movie, not walking out with a copy in your possession.
    And unlike Valve and Steam, Netflix is a registered Business in Australian with an ABN. They also have an Australia office, support and data hosted here in Australia.

    Also. Steam doesn't sell games. They sell licences.

    Last edited 05/05/15 3:47 pm

    quick question. I dunno if anyone has considered this angle.

    is this one way companies like apple, microsoft etc are getting away with paying zero tax?
    cause there is no paper trail etc.

    if we do tax internet sales, will that make these other companies compelled to pay the tax they should be paying?

    Digital piracy is rampant in Australia, and they want to charge us more??, sorry what?

      Short version - Foxtel had a sook to their stooges about the local Netflix launch.

    Wolfenstein: The Old Blood on Steam:
    USA Price: $19.99 USD
    Australian Price: $39.99 USD (!!!)

    Fix the f**king Australia Tax first. Then we can discuss adding GST to digital and low-value imports.

    The only reason they want it is because they are greedy and want pay rises. They have no right to tax stuff sold outside of Australia. That's what you get charged US tax and EU tax for.

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