Almost all goods and services purchased online from overseas from July 1, 2017 will have the GST attached, Federal Treasurer Joe Hockey has agreed with his state and territory counterparts.
The tax currently only applies to overseas online purchases worth $1,000 or more.
- Joe Hockey held talks with state and territory treasurers
- They agreed to ending the GST-free threshold
- Only foreign companies with an annual GST turnover of $75,000 or more will be affected
- Decided against removing the tax from feminine hygiene products
Mr Hockey has ended talks in Canberra with his counterparts, where they agreed to ending the GST-free threshold.
“This will deliver competitive neutrality for Australian businesses — it will ensure there is a fair and equal treatment of all goods and services,” Mr Hockey said.
“If there’s leakage out of the GST, it is our responsibility — with the unanimous agreement of the states and territories — to plug the hole.
“Unquestionably, the low-value threshold has had a negative impact on Australian jobs and Australian businesses.
“What it effectively means is that we’re going to have taxation officials travel around the world and visiting these companies and asking them to register for GST purposes.”
Mr Hockey said only foreign companies with an annual GST turnover of $75,000 or more would be affected, and the measure could apply before July 2017 if possible.
He said further work was needed to estimate how much tax would be raised, but said revenue would outweigh enforcement costs and compliance would rise over time.
“There is now a growing global consensus where the vendors of goods and services overseas will willingly apply consumption taxes to their goods and services sold into a particular jurisdiction,” he said.
“In relation to digital products, it’s easy to identify a number of those companies such as Netflix or Facebook or others.”
GST to stay on feminine hygiene products
Treasurers decided against removing the tax from feminine hygiene products.
The issue hit prominence again last month when Mr Hockey was asked about it on ABC TV’s Q&A program.
“Mr Hockey, do you think that sanitary products are an essential health good for half the population?” university student Subeta Vimalarajah said.
“Do I think sanitary products are essential? I think so, I think so,” the Treasurer replied, before saying the GST should be removed from the sanitary products.
“It probably should, yes. The answer’s yes,” Mr Hockey said.
But after today’s meeting, Mr Hockey said a number of treasurers vetoed the push.
“They know what my view was and I said, ‘it’s over to you guys’,” he said.
“We talked about it last night among the treasurers. Today it was … simply a case of going around the room and asking people.”
Labor treasurers from the Australian Capital Territory, Victoria, South Australia and Queensland were pushing to have the tax scrapped, but the move was opposed by Liberal Party treasurers.
ACT Chief Minister Andrew Barr said it would be some years before there was any prospect of a change of government in those states and territories.
“For now this issue will not progress but I’m sure, given the strength of public opinion, that it will be revisited in the future,” he said.
WA Treasurer Dr Mike Nahan said he had made it clear to his counterparts that his state would not support further changes to the GST without changes to the distribution formula.
Dr Nahan said the extra revenue would be shared on a per capita basis and not the formula which currently delivers WA 30 cents in the dollar.
He said there would be strict conditions on WA supporting any more changes to the GST.
“I made it clear any cooperation from WA in the wider reform of the GST will include reform to the distribution,” he said.
They also failed to agree on a way ahead for broader GST reform but will meet again later this year.