Debate over GST on imports ratchets up

“New laws due to start on July the 1st should see GST collected on low-value imports. The question is, who will collect it?” says UNSW Business School Lecturer in Taxation & Business Law, Kathrin Bain.

This Friday a Senate inquiry will hear evidence about who should collect GST on imports worth less than $1000.

“Collecting GST from low value imports may inconvenience the consumer and incur huge costs that defeat any tax raising purpose,” she says.

“The issue the senate will have to look at is how is it going to be collected, who will collect it, will there be extra fees for collection, and will larger overseas suppliers have to register for GST while smaller ones still can import into Australia GST free?” She adds, “all this still seems to be up for debate, and yet the new rules are due to be implemented in less than three months.”

Kathrin Bain can give analysis of the background to GST being collected on low-value imports, and the current state of play with GST.

Internet retail giant eBay is threatening to ban Australians from buying from overseas sellers because of plans to impose GST on foreign online purchases worth less than $1000 from July 1.

“The current plan is the ‘vendor registration model’, whereby overseas retailers who send parcels to consumers in Australia will have to register for Australian GST if their turnover exceeds $75,000 a year,” she says. “But that is a fairly low level, and would be subject to currency fluctuations. Will a small software company in China or a bookseller in Wales want to register with the ATO? It looks doubtful at the moment. Additionally, when it comes to domestic sales, the ATO has always taken the view that eBay is not the ‘supplier’ of goods for GST purposes. It is up to the individual seller, if required, to register for and charge GST.”

Other countries, like the US, are now actively raising their consumption tax threshold to avoid exactly this problem. In the US, their Senate is proposing to increase its LVIT from $US200 to $US800, bringing it roughly in line with Australia’s current level.

Kathrin Bain has researched the GST low value threshold, and suggests: “until there is a more cost-effective way of collecting tax on low-value products, lowering the threshold wouldn't make sense from a revenue collection point of view. It would just cost more to collect than it would generate.”

For comment contact:

Kathrin Bain on 02 9385 9541, 0400 794 285 or k.bain@unsw.edu.au
or
Dale Boccabella on 02 9385 3365, 0427 591208 or d.boccabella@unsw.edu.au

Media contact: Julian Lorkin: 02 9385 9887