Forums > General Discussion   Shooting the breeze...

GST on low value imported goods

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Created by FormulaNova 5 months ago, 6 Jun 2018
AUS1111
WA, 3130 posts
7 Jun 2018 9:14PM
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Paddles B'mere said..
I absolutely agree with you FN, our retailers are being effectively penalised on price by 10% for final consumer goods, this should have been cleared up years ago.

For those that believe it is difficult to collect, we aren't in the dark ages any more and the tax man doesn't show up in a horse and cart with a knight on horseback. These companies like ebay have advanced e-commerce systems that could easily figure out where a buyer is located, internally calculate 10% of the purchase price if it is from an overseas business seller, backcharge it to the seller on top of the sales fees and then remit the amount to the ATO on a cycle. The reason they don't want to do it is more about a protest about being told what to do than the cost to implement the software change I reckon.


As I recall, it went a bit like this: last time Labor were in power the populists in the party wanted to introduce GST on low-value imported goods, but at the time there was a guy who knew a thing or two about economics, by the name of Craig Emerson. Dr Emerson said "how about we have a little look at this first?" and so they commissioned the boffins at the PC to investigate using a funny old thing called "cost vs benefit analysis", and unfortunately for the populists the news wasn't good; it turned out their idea was in fact very stupid. So they didn't do it.

So a bit later the coalition are in power and despite having a number of people who know a thing or two about economics they said "f*ck it! let's do it anyway coz it might get us a few votes!".

So in the end millions of Australians had to pay more tax as well as losing access to the like of Amazon.com and the whole exercise also cost the government more than it brings in revenue. It does potentially benefit the owners and employees of a small number of Australian businesses, and as is often the case, these businesses are far more able to band together and lobby noisily for advantages that are detrimental to the other 99% of the population.

...and if you prefer the long version over my summary: treasury.gov.au/publication/low-value-parcel-processing-taskforce-final-report/

Paddles B'mere
QLD, 1851 posts
8 Jun 2018 8:21AM
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Your version is great AUS1111. The factor that has changed with time since Dr Emerson first poopooed the idea with his initial cost benefit analysis is this funny old thing called "technology" and the fact that the capability of "technology" generally increases exponentially with time. I would imagine that someone has now redone the cost benefit analysis considering we are now in the "data age".

So if we consider that maybe the bulk of the <$1k imports are facilitated by an e-commerce website of some sort and that there is a data trail attached to all these transactions then if you have enough computing power you can track all this stuff and make the e-commerce website liable for the GST. So the only real decision is really now in the hands of the e-commerce website and it goes a little something like "do you make enough money trading in Australia to bear the cost of modifying your software" or "don't you". As always, the market will rule supreme, because if there is enough demand; and a player like Amazon pulls out; another player will simply fill the gap.

This is not about capturing ALL transactions, it is about generating revenue by capturing MOST transactions and I'm all for it.

Dunno if anyone is aware of this one if they're on an anti-GST crusade. This is another hole closing up where there has been a pattern forming of development companies "going bust" before they remit their GST to the ATO. Now the home buyer is responsible for remitting the GST.

www.accountantsdaily.com.au/tax-compliance/11751-new-property-gst-rules-opens-door-to-complexity-manipulation?utm_source=Accountants%20Daily&utm_campaign=07_06_18&utm_medium=email&utm_content=2

nnnbrewery
NSW, 56 posts
8 Jun 2018 9:27AM
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Paddles B'mere said..
Your version is great AUS1111. The factor that has changed with time since Dr Emerson first poopooed the idea with his initial cost benefit analysis is this funny old thing called "technology" and the fact that the capability of "technology" generally increases exponentially with time. I would imagine that someone has now redone the cost benefit analysis considering we are now in the "data age".


The report referenced was in 2012. In 2012, ebay, amazon, online shopping and online transactions were already pretty well established technology. There probably are further advances and economies of scale since then, but I have my doubts they would change the equation that much.

Indeed, in the "data age", most (or all?) government policy should be based on good data ("evidence based policy"). But they are not using a fresh cost/benefit analysis to spruik this policy change - or did I miss that?

Harrow
NSW, 2390 posts
8 Jun 2018 10:06AM
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Are the overseas web-sites really going to be so compliant if it hurts their business?

A web-site that I shop from actually allows you to specify the value of goods you want to be stated on the customs declaration, regardless of what the actual price was. I presume this is to allow people to minimise import duty wherever they live.

Paddles B'mere
QLD, 1851 posts
8 Jun 2018 11:23AM
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No Harrow, if it hurts their business they will not be compliant at all. They will be doing their own cost/benefit analysis in the background and figuring out if they want to keep trading here. But again, the market rules the roost, if a business chooses to withdraw then prices/demand go up and a new player will come in if they deem it viable.

nnnbrewery, changes in technology are exponential, so 2012 is the dark ages for high tech, put it this way are you still using the same PC and software that you were using in 2012? The data analysis and collection tools that the ATO have at their disposal would be pretty advanced.

nnnbrewery
NSW, 56 posts
8 Jun 2018 6:28PM
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Paddles B'mere said..

nnnbrewery, changes in technology are exponential, so 2012 is the dark ages for high tech, put it this way are you still using the same PC and software that you were using in 2012? The data analysis and collection tools that the ATO have at their disposal would be pretty advanced.


Sure, ATO technology is much advanced. So is the technology of the retailers. The volume of transactions is also probably orders of magnitude higher. Even if the technology is advanced, there are likely a lot of people driving it somewhere and they cost a lot in Australia. In any case, if the "business case" stacks up now... why isn't that front and centre when selling this policy?

FormulaNova
NSW, 7547 posts
8 Jun 2018 7:01PM
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The funny thing about this is that Amazon claim that its too difficult to implement, yet the USA seems to have all sorts of weird state taxes and differences between states when they sell something from one to the other.

If they can do that, I think charging a flat GST across everything is pretty easy!

I use Audible a bit and haven't yet moved from their US site to the 'new' Aus site. This alone will bring in an easy 10% for our local economy plus probably a bit more in profit.

Paddles B'mere
QLD, 1851 posts
8 Jun 2018 7:24PM
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For sure nnnbrewery, the online retailers will have technology just as advanced as the ATO. I can't comment on volume of transactions because I wouldn't know. The people running/modifying the software won't be in Australia though, they'll be in some low cost centre elsewhere in the world.

Good comment on the business case, I reckon it just comes down to basic politics, right now Aussie consumers aren't paying 10% GST on overseas purchases and soon they will be and people hate paying tax. The government should be selling it to the GST paying public as some people weren't paying for some purchases and now they will be.

Agree FN, there's different VAT's and sales taxes all over the world so I'm with you in assuming that these big online sales platforms have figured out to do it. I reckon Amazon are just "playing the game" and trying to politicize it by getting the public up in arms, if Amazon can afford to not do business here then it's their business, someone else will simply step in to meet the market and comply with the GST ruling.

jn1
SA, 1583 posts
8 Jun 2018 7:06PM
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Chris6791 said..
There's no interruption to the supply chain for low value goods. Online retailers will presumably jack up the price for Aussies, collect the 10% tax at the time you click 'agree to purchase' and forward it onto the govt.

Haha.. okay, we'll see what happens

AquaPlow
QLD, 658 posts
8 Jun 2018 10:23PM
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This is the consequence of the GST on imported goods sold on-line....
You can run any economic theory you want on this pricing it will not hold water..

The goods come from China.
The supply company is renowned for its shipping logistics - they warehouse in the States and in Australia.
It is the same product.

Enter this...
www.amazon.com/Quadcopter-Potable-Carrying-Batteries-Explorers/dp/B01E1HBV50/ref=sr_1_2_sspa?ie=UTF8&qid=1528459449&sr=8-2-spons&keywords=syma+x5c&psc=1 USD $64.99

or add .au to the URL
www.amazon.com.au/Quadcopter-Potable-Carrying-Batteries-Explorers/dp/B01E1HBV50/ref=sr_1_2_sspa?ie=UTF8&qid=1528459449&sr=8-2-spons&keywords=syma+x5c&psc=1 AUD $367

Just the usual in your face small market big player U want here is my price.. with the government trying to enforce geo-location rules to assist them..
The sad thing is in this instance Amazon already collect tax for the State in USA which charge it so making an O/S destination another "State"and add their tax would not give this result... neither would collecting the tax at point of entry into Australia the way they do now for >$1000
So it is a Harvey Norman induced mark-up...
Sadly
AP

JIC
USA v's OZ






FormulaNova
NSW, 7547 posts
9 Jun 2018 7:33AM
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Wow, that's a pretty damaging Amazon result. I wonder how they justify that? Even with shipping you know there is no chance they are making the same profit. You could send that fedex and it would be cheaper.

So, it sounds like Amazon are trying to profiteer. Its not a simple case of just buying the product from Amazon US and then adding GST, it sounds like Amazon are using this as a chance to subsidise their Australian distribution centre.

I guess if you buy it off ebay you are on a level playing field. Ebay charge GST, but you get the same product from the same supplier, but with the 10% charged by ebay.

AUS1111
WA, 3130 posts
9 Jun 2018 10:57AM
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It's not as though Australians are going to stop buying <$1000 stuff from overseas retailers just because the price has gone up by 10%. Clearly the GST is a minor factor at that price point.

Nup. Aussies will now:

1. Have less choice online
2. Pay 10% more to fund a tax that doesn't even cover the cost of collection
3. Any benefit to local retailers / e-tailers will be very marginal and have no impact on the wider economy

So it's just a waste of resources for the benefit of a few politicians who think there's a vote in it.

At the request of the government , the PC did issue a review of collection models and issues a report in November 2017. Key findings are summarised below. If you can't be bothered reading that, I will summarise it for you:

"It's still a stupid idea but since the government wants to press ahead anyway, we have come up with the least-bad option".






kk
WA, 696 posts
30 Jun 2018 11:57AM
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Well it looks like it's real from what Aliexpress sent out today

Australia GST Tax Notice Smarter Shopping, Better Living!

Australia GST Tax NoticeHello,From 1 July 2018, Australian goods and services tax (GST) 10% will apply to each order valued at A$1,000 or less, and AliExpress is required by law to collect such GST and remit to Australian Taxation Office.For more information, please visit :


www.ato.gov.au/Business/International-tax-for-business/In-detail/GST-on-low-value-imported-goods/Information-for-operators-of-electronic-distribution-platforms/.

Sincerely,
AliExpress.com

kk
WA, 696 posts
30 Jun 2018 11:57AM
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Well it looks like it's real from what Aliexpress sent out today

Australia GST Tax Notice Smarter Shopping, Better Living!

Australia GST Tax NoticeHello,From 1 July 2018, Australian goods and services tax (GST) 10% will apply to each order valued at A$1,000 or less, and AliExpress is required by law to collect such GST and remit to Australian Taxation Office.For more information, please visit :


www.ato.gov.au/Business/International-tax-for-business/In-detail/GST-on-low-value-imported-goods/Information-for-operators-of-electronic-distribution-platforms/.

Sincerely,
AliExpress.com

RichardG
WA, 1941 posts
30 Jun 2018 2:06PM
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I just hope no one supports the increase of GST beyond the existing 10%.

AUS1111
WA, 3130 posts
30 Jun 2018 5:54PM
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RichardG said..
I just hope no one supports the increase of GST beyond the existing 10%.


Why not? It's a very efficient tax. We could potentially do away with a few of the less efficient ones.

rod_bunny
WA, 1013 posts
30 Jun 2018 7:57PM
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How many of the online stores (based outside of Australia) will actually pass on the tax collected to the ATO?


"Australia GST Tax Notice Hello,From 1 July 2018, Australian goods and services tax (GST) 10% will apply to each order valued at A$1,000 or less, and ChinaBay is required by law to collect such GST and remit to Australian Taxation Office.For more information, please visit :"

HahahahahWeJustGot10%MoreForNothingThanksATO.gov.au

RichardG
WA, 1941 posts
1 Jul 2018 1:24PM
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AUS1111 said..

RichardG said..
I just hope no one supports the increase of GST beyond the existing 10%.



Why not? It's a very efficient tax. We could potentially do away with a few of the less efficient ones.


That is true and there is merit in what you say but remember the abolition of stamp duty was meant to occur with the introduction of GST. To date it has occurred but only partially. It may well happen in full one day but why increase the GST when 10% is a fair impost for end user consumers to bear. Increasing it means consumers pay more than they do today. I would support broadening what is taxable but not increasing the rate.

bazz61
QLD, 1684 posts
1 Jul 2018 6:15PM
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It will , & most probably widen , how else can the Turdbul make up lost revenue from the tax cuts , it has in other countries with comsuption tax es that have reduced business tax namely England & Nz .

bazz61
QLD, 1684 posts
1 Jul 2018 6:21PM
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AUS1111 said..

RichardG said..
I just hope no one supports the increase of GST beyond the existing 10%.



Why not? It's a very efficient tax. We could potentially do away with a few of the less efficient ones.



Select to expand quote
AUS1111 said..

RichardG said..
I just hope no one supports the increase of GST beyond the existing 10%.



Why not? It's a very efficient tax. We could potentially do away with a few of the less efficient ones.

obviously you hav never processed Bas statments monthly and done the tax dept work for them , an unpaid tax collector for the gov , much simpler to hav a finacial transaction tax or sales tax .

AUS1111
WA, 3130 posts
1 Jul 2018 7:45PM
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It's efficient in the sense that is penalises consumption, rather than production. Put another way; income tax is a disincentive to work whereas GST is a disincentive to consume. GST is also hard to avoid. That said, it is important to have a broad based and balanced taxation system for a whole range of reasons.

The debate is at the margin; if taxes need to be increased or decreased, do we introduce new taxes or adjust current ones? I don't think anyone can seriously argue that reducing company tax won't induce economic growth, but some on here have argued, rightly or wrongly, that the benefits will flow disproportionately to what BS and other populists like to call the "big end of town". They also like to drag out the old straw man "trickle down economics ".; a philosophy espoused by nobody, ever.

But you're right, it is more work for the average self-employed punter.

RichardG
WA, 1941 posts
2 Jul 2018 10:45AM
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AUS1111 said..
It's efficient in the sense that is penalises consumption, rather than production. Put another way; income tax is a disincentive to work whereas GST is a disincentive to consume. GST is also hard to avoid. That said, it is important to have a broad based and balanced taxation system for a whole range of reasons.

The debate is at the margin; if taxes need to be increased or decreased, do we introduce new taxes or adjust current ones? I don't think anyone can seriously argue that reducing company tax won't induce economic growth, but some on here have argued, rightly or wrongly, that the benefits will flow disproportionately to what BS and other populists like to call the "big end of town". They also like to drag out the old straw man "trickle down economics ".; a philosophy espoused by nobody, ever.

But you're right, it is more work for the average self-employed punter.




All true. The 10% also is also as I have said before a fair impost on the consumer. Anymore than that then cost of everything eg surfboards, services to plumbers, electricians, power, gas and water, lawyers, engineers, contractors and accountants, toys, goods eg windsurfing equipment, meals, petrol, dining increases even more. The man in the street pays more and that is not a fair go. Small business "collectors of tax" benefit from simple calculations based on 10%. We need to recognise politicians waste a lot of money in the bureaucracy of government and I am loathe to let them increase the rate of GST. I don't mind broadening the base.

nicephotog
NSW, 160 posts
2 Jul 2018 4:26PM
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FormulaNova said..
I think the GST on imported goods is coming in very soon.

Does anyone know how this is going to work with ebay? Does ebay end up charging the GST on everything that needs to come in from overseas, or does the government send you a bill for each item that comes in through the post?



Goods imported by mail are or were at least tax fre up to 1000 AUD in a year. Other than that you must declare the goods in postal import and fill out a special" Self Assessed Clearance" form with dates goods type receipts.
SAC form info (PDF)
www.homeaffairs.gov.au/Cargosupport/Documents/self_assessed_clearance_declarations.pdf
SAC form info (PDF)
www.homeaffairs.gov.au/Importingorbuyingfromoverseas/Documents/self-assessedclearancesacdeclarations.pdf

In online currency such as Visa or MasterCard by a multi-national site such as amazon or ebay the government had said it will require to put extra back end programming into the commerce sections to extract the GST , so far the status of that i do not know.
Those card transactions are "balance tricky" because of the cost of conversion between economic units having quite a serious fee in some cases so 1000 AUD cost requires around 200 AUD extra to be sure it goes through !

And if you import anything through normal channels you need an N10 declaration
windsolarhybridaustralia.x10.mx/Import-Process%3Dweb.pdf

Read the red and white text on this page for how to do N10 import and transactions also
windsolarhybridaustralia.x10.mx/light-aircraft-ppl-vh.html

Paddles B'mere
QLD, 1851 posts
3 Jul 2018 1:43PM
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I agree AUS1111, a consumption tax is one of the most efficient taxes there is, if GST went up and other more inefficient taxes were removed or changed it'd make a heap of sense for the ATO/government. Lowering income taxes so people can consume more when you're suss on the downward sloping curve of the Australian GDP is good government policy.

We have to remember that the amount of tax a government "earns" is only a small part of a much bigger picture that is the economy as a whole, it's the "influence" that a tax may have on spending that has the biggest impact on the economy so making them as efficient as possible and keeping them as low and as simple as possible is best.

bazz61
QLD, 1684 posts
3 Jul 2018 6:28PM
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Paddles B'mere said..
I agree AUS1111, a consumption tax is one of the most efficient taxes there is, if GST went up and other more inefficient taxes were removed or changed it'd make a heap of sense for the ATO/government. Lowering income taxes so people can consume more when you're suss on the downward sloping curve of the Australian GDP is good government policy.

We have to remember that the amount of tax a government "earns" is only a small part of a much bigger picture that is the economy as a whole, it's the "influence" that a tax may have on spending that has the biggest impact on the economy so making them as efficient as possible and keeping them as low and as simple as possible is best.


I fail to see how a family of 5 with a high cost of living expenseses pays more in GST due to spending more , whilst Gina gets a huge reduction in personal taxes ... is going to help society , it wont & will increase ineqaulity , the more consumption taxes increase so does inequality, the sats don't lie , there is plenty of info on this if you care to google .
Doing BAs returns is a huge timewaster for any business .
Also GST is avoided by cashies ,.To say it is efficient is stretching it .. those that are selfemployed can fill up the boat with the business credit card & claim back the GSt as a business cost , thats a small example .

Paddles B'mere
QLD, 1851 posts
3 Jul 2018 7:03PM
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Look at it this way Bazz, right now a high income earner can take steps to minimise their taxable income and therefore their tax payable. A VAT doesn't discriminate, if you consume then you pay tax whether you are a high income earner or a battler; the VAT doesn't care. The system relies on the reality that a high income earner has a more expensive lifestyle, so will consume more and require more services and so ends up paying more tax.

Efficiency, in terms of a tax is how easy it is to make revenue with minimal administration from the government. A VAT is very efficient, it makes heaps of coin for not much effort from the government, it's a perfect tax really.

nicephotog
NSW, 160 posts
6 Jul 2018 9:03PM
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Paddles B'mere said..
Look at it this way Bazz, right now a high income earner can take steps to minimise their taxable income and therefore their tax payable. A VAT doesn't discriminate, if you consume then you pay tax whether you are a high income earner or a battler; the VAT doesn't care. The system relies on the reality that a high income earner has a more expensive lifestyle, so will consume more and require more services and so ends up paying more tax.

Efficiency, in terms of a tax is how easy it is to make revenue with minimal administration from the government. A VAT is very efficient, it makes heaps of coin for not much effort from the government, it's a perfect tax really.


..."Efficiency, in terms of a tax is how easy it is to make revenue with minimal administration from the government. A VAT is very efficient, it makes heaps of coin for not much effort from the government, it's a perfect tax really."...

And that's the story as it was for quite some time on SAC Self Assessed import declarations that are almost honesty and the ceiling/floor on import to 1000 AUD p/year or so.
The waste of time collecting it as they are arguing with internet GST at this time.

FormulaNova
NSW, 7547 posts
13 Jul 2018 9:32AM
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I bought more stuff from O/S on ebay. I noticed that I now get charged the extra dollar or two in GST, but other than that it seems like a non-issue. Who would have thought it was such a trivial system change to make for a global company that already charges taxes

I think they have gotten it wrong though. I think you are supposed to have at a minimum the advertised price to include the GST and not just wack it on as you go through the payment process. Here, you cannot legally advertise the ex GST price without also advertising the incl. GST price and/or the amount of the GST. Some shonky businesses here still try and avoid it though, even though it has been almost 20 years since the GST was implemented.

bazz61
QLD, 1684 posts
13 Jul 2018 11:20AM
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if you you use a hidden IP address would you still be charged GST or is it identified by where the postage is ..?

Adriano
9491 posts
13 Jul 2018 10:03AM
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AUS1111 said..

RichardG said..
I just hope no one supports the increase of GST beyond the existing 10%.

Why not? It's a very efficient tax. We could potentially do away with a few of the less efficient ones.

We should definitely consider increasing and broadening the GST in line with other OECD countries and remove the inefficient dragnet taxes like:

Stamp duty
Payroll tax
Fuel excise
Medicare levy
All tax on super contributions

and, continue to reduce income taxes.

NG should also be abolished for all established property investments.



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Forums > General Discussion   Shooting the breeze...


"GST on low value imported goods" started by FormulaNova