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.