GST On All Online Goods And Services Won't Start Until July 2018

Image: iStock

We have some good news and bad news for online shoppers. First, the good news: A proposed GST amendment - which will see GST extended to all goods bought overseas - has been delayed for another year.

Now for the bad news: It will almost certainly come into effect on July 1 2018, and the similar 'Netflix tax' kicks in at the end of this month. Better start stocking up on those streaming subscriptions and overseas goodies while the going's good.

From July 1 2017, the Federal Government will apply the Goods and Services Tax (GST) to all digital products and services supplied into Australia. A 10 per cent GST tax will also be applied to imported goods worth less than $1000 from July 1 2018. (Currently, overseas products that cost under $1000 are GST-free.)

The GST changes to online goods were originally to be implemented this year. However, an amendment pushed through by Labor has given Australian shoppers a 12-month reprieve. The amendment will require the Productivity Commission to investigate the most effective models available for collecting the GST on low-value online goods.

Once the Productivity Commission submits its findings, the bill will still need to be voted in by the House of Representatives. However, it is expected to pass without incident with all sides of politics supporting the principle of the bill.

For the most part, the tax will be collected via the international seller. However, the government has outlined scenarios where the tax will be the responsibility of the operator. Needless to say, there's still a lot of confusion about precisely how the tax will be collected.

Meanwhile, the so-called Netflix tax will be imposed on all "intangible supplies" from next month. This includes digital content, games and software as well as consultancy and professional services performed offshore for customers in Australia. Only supplies made to consumers will be caught, however - business-to-business transactions will be exempt.

GST will be imposed at a rate of 10 per cent on the value of the supply. This means that a 12-month subscription to Netflix's entry level tier will jump from $107.99 to $118.60 - a difference of around $10.70 per year.

Curiously, affected overseas companies - including Steam and Netflix - do not appear to have passed on the cost of the tax to customers yet. (Usually, this happens as soon as the bill is passed.) We'll report back when we have more answers. In the meantime, you can read about both taxes in further detail below.

The 'Netflix Tax' Explained

From July 1 2017, the Federal Government wants to apply the Goods and Services Tax (GST) to all digital products and services supplied into Australia. In practice, this means the amount of money you spend on software downloads and streaming services is set to increase across the board. Here's everything you need to know about the so called "Netflix Tax" and how it will affect your wallet.

Read more


Comments

    What's the point of living in this country anymore?

    Everything is getting ridiculously expensive. Food, electricity, sub-par internet, medical, health insurance, car insurance, rent and fuel. Now, entertainment, as if it wasn't expensive enough as is. The price increases just seem to be never ending while my wages get stretch even further to account for all these price increase.

    It's just getting too hard.

      Liberals need to fill that $500 Billion dollar (and growing) debt somehow right? Why not hit the average joe time and time again. Eventually we'll get to their ultimate plan: Work 18 hour days from the age of 16 through 90, hand our paychecks back to the Government on payday and all live on the streets while Politicians sit in their huge retirement mansions and investment properties that the taxpayer has paid off for them. While our only retirement is to walk out of the workplace one day and die.

      Food, electricity, medical, insurance, rent, fuel? You don't really need those! As for things like Internet and entertainment... You're too busy working your three part time or casual jobs making minimum wage in order to have enough free time to actually need those right?

      Last edited 20/06/17 2:14 pm

        poor people don't drive cars.
        if you want to buy a house, get a better job that pays more money.

        these probably arent exact quotes, but both of these were made by former treasurer Smokin Joe Hockey. The government he was a part of was so bad they got knifed and replaced with a slightly less smelly shitshow that we have now.

          While I wasn't a Joe Hockey fan, at least he was upfront with how he was going to screw us. The current Government prefer to screw us by stealth.

        Don't forget water.

        The worst thing is if you try to go self sufficient on some of these things (like water) you still get slugged with a connection fee even without using it.

        I don't mind the idea of collecting GST on foreign sales to us. But I think the "tax it on every purchase regardless of cost" idea is ridiculous. If I buy a $2 part from a Chinese supplier it should be exampt. Maybe $1000 is too high, but set a $100 exemption threshold or something a bit more reasonable.

          $100 might be too low. I think a $400-$500 exemption threshold would be a low enough number for the everyday consumer to have choice in who they buy goods from. This new system pretty much locks us out of the global marketplace and back into Australia rip-off retail.

            Well, I'd like to think (hope) that the introduction of Amazon to our marketplace may shake that up. But to be honest, I'm not too fussed on buying a bigger item - say a TV online and getting it shipped here. I'm more worried about the small purchases like a CD or a tap fitting and other random $10 purchases that are going to be a pain.

            I read something awhile back that the cost to administer the GST on those tiny purchases would outweigh the return in collecting it. That's a big reason not to do it as well. That and the fact that a company isn't likely to rejig their systems to account for a $10 purchase every now and then. Whereas one that's making $400 sales actually might.

            As for what the threshold should be $10, $100, $400 I don't know. But I feel like there should have been discussion about that, and there should have been one established.

      This is the best country and easiest country to live in in the world, or at least close to it. That's a fact.

      While we have many shortfalls you clearly haven't seen or been to many other countries.

      $10/yr more for Netflix.
      If you have the luxury of living in a country and can complain about that, you've got it good.

      The fact that we have an extensive public healthcare system is reason enough to live here. Feel free to go live in the US where everything is cheaper, and you're paid less with an awful healthcare system.

    Just when you think Australia cannot get worse.

    GST is effectively administered by businesses - do they really think overseas companies are going to do that? Sure the big ones will, because they will be scrutinised, but the mid to smaller sized ones will either ignore it or just not bother selling to Australians because it's not worth the hassle.

      This is the funny thing about it, the government is expecting overseas companies to just collect the tax and give it to the ATO, but they don't have any way to enforce it, so the ones ignoring it will be business as usual.

      Any other way of collecting the tax will mean it costs more to run than it would collect in tax revenue. Which makes all of it a pointless exercise, which is pretty much on point for this government.

      Last edited 20/06/17 2:42 pm

        I seem to recall a study done on this a couple of years ago which basic stated the cost to manage/administer this would outweigh anything earned from the GST. So more taxpayer cash gone on trying to collect more tax. I really have no words for this absolute rort.

          I think the way they are planning on implementing it, by just hoping that overseas sellers do it with no way to enforce, is the only way they would be able to make anything out of it.

          And then its just that overseas sellers can just ignore it

    US Netflix account, US PlayStation account, US Amazon account (that I use to send "gifts" to myself in Australia), etc.

    The Netflix tax will be super easy to avoid and is just a waste of time and resources!

      customs is going to have to have a few big warehouses.....

    Absolutely criminal. Way to ruin one of the last few great things about this country.
    Will be cutting off my ebay account next year at that time as I will never pay a cent of this illegitimate tax. The only way it could be considered legitimate is if it were to only apply to new goods where the identical item is available here. The government should not steal money from people just because they want to buy a dress/pc monitor/shoes/other item that is not sold here.

    While the motivation might be noble, GST collections go back to the states, if it is costing more to collect than it will ever raise, what's the point? A GST on Netflix doesn't bother me terribly, it's a service provided in Australia. It's a Goods and Services Tax. Reasonable enough.

    I predict plenty of overseas online retailers decide "Fuck it, too hard." and stop shipping here. Meaning we have to set up bullshit forward shipping services, eating up any savings made.

    And that's the rub. This is protectionism. We might not have an import tax due to various Free Trade Agreements but a tarrif by any other name.

    so whens the tax on oxygen coming?

    still plenty of money to squeeze out of us!

Join the discussion!