The Australian Government is attempting to level the playing field between Australian and overseas retailers with proposed GST changes effective from 1 July 2017. Here’s what you need to know.
Australians are increasingly turning to overseas sellers when they shop online to access cheaper prices and a larger variety of goods and speciality items. The government has responded to this consumer trend by proposing GST changes to come into effect from 1 July 2017, where all goods purchased by Australians from international websites will be subject to the 10% GST tax. Currently this GST charge only exists on international purchases when goods are above $1,000.
What are the proposed GST changes?
The two main GST changes you need to be aware of are new taxes being applied to ‘low-value imported goods’ and ‘digital products and services’.
- GST on low-value imported goods
A 10% GST tax will be applied to imported goods worth less than $1,000.
- GST on digital products and services
A 10% GST tax will be applied to electronic goods and services. Known as ‘Netflix tax’ this tax will apply to digital streaming services and music purchased online.
Critics see this as a thoughtless reaction, hitting consumers with added costs and delays while ignoring the real reasons Australians shop online. Some of the online social buzz around this topic suggests many consumers just don’t feel Australian retailers are keeping up online, at any price.
A recent Choice.com.au study of online shoppers found that only 12% of shoppers said saving on duties and tax was their main reason for shopping online, while 68% say that shopping online saves them more than the 10% GST, compared with a local retailer.
Where will the GST changes apply?
The new GST legislation will apply to everything you purchase online from international retailers. This includes clothing, electronics, media, toys, furniture and many other of your favourite goods for under $1,000, unless it’s from an Australian seller (in which case the 10% GST law already applied).
Maximise your online shopping before the change
Here are four tips to take advantage of your online shopping before the proposed GST changes are passed by parliament.
1. Plan ahead and shop online now
Shop online before GST is added on 1 July 2017. By doing some forward planning you could buy gifts or things you want before the effective date.
2. Support Australian small businesses
Start research now to find Australian online retailers who provide goods or services you usually seek overseas.
3. Compare prices
Some overseas shopping websites might still be cheaper than Australian competitors even when you price compare with GST added.
4. Spread the word with your friends and family
Share this information with your friends and family so they are aware of the proposed GST changes.
Will it really happen? The Economics Legislation Committee will report on this Bill by 09 May 2017. It’s possible this bill will not passed, or may be delayed, but the Government aims for a 1 July 2017 start date.
What do you think about these proposed GST changes? Will they stop you from shopping online? When you’re looking at an overseas purchase, would added GST and shipping tip the scales in favour of Aussie retailers? Share your thoughts with us on Facebook.