Digital goods to get pricier with proposed zero tax threshold

Australians could be subjected to a zero tax threshold for online purchases, should the State and Commonwealth treasurers come to a decision in Canberra today.

The new proposal would mean that all imported parcels would be subject to the goods and services tax, even if the cost were under $1000. Previously, discussions were raised about lowering the threshold to a few hundred dollars, but it is believed that state treasurers are now in favour of removing the threshold altogether.

The news comes just months after the ‘Netflix Tax’ was announced, which subjects all purchases from streaming platforms to an extra 10% GST. Goods including music, movies, games, software and ebooks will be affected, as part of the Government’s 2015 Budget goal to raise $350 million in the next four years.

Last month, NSW Premier Mike Baird announced that he was pushing for the Goods and Services Tax to be raised to 15%.

“In 15 years from now, we face a $35 billion funding crises that threatens to end healthcare as we know it,” said Baird, in a clip addressing the proposal.

On Friday, Federal Treasurer Joe Hockey told ABC Radio that the tax would be collected directly from overseas retailers and that other tax administrators had similar systems in place.

Canada, for example, has a tax-free threshold of $20, while the United Kingdom has a tax-free threshold of 15 pounds. However, Australia could be headed in the direction of the United States, who also imposes a zero threshold on all imported goods.

Consumer watchdog CHOICE opposes the new tax reforms, saying it could lead to a ‘parcel pick-up tax’ on top of the GST.

In a statement issued to TMN CHOICE Campaigns Manager Erin Turner said: “It is the only way that other countries, like the UK, have been able to collect tax on parcels from small, overseas businesses.”

Turner was also concerned that the move could negatively impact sites that sell music, movies and merchandise.

“A change to the GST LVT could have a major impact on small overseas retailers, such as those that sell niche music, film or cultural products to passionate but small groups of Australian fans.

“It is quite likely that we'll see reduced choice for Australian consumers, as international businesses may decide it's easier not to sell into Australia rather than change their systems to pay GST,” she said. “This is exactly why the government needs to do the work and assess the impact of reforms before going ahead with the change."