Statement on COAG in principle agreement to pursue reform of GST for online international purchases

23-Jul-2015  – Retail Council 

The announcement of an in principle agreement by COAG Leaders to broaden the GST to cover overseas online transactions under $1000 today is welcomed by Australia’s top retailers, who have been advocating for the tax integrity measure to be addressed for several years.

Retail Council CEO Anna McPhee said the in principle agreement is an important step forward in ensuring goods and services consumed domestically are taxed in the same way.

“Modelling commissioned by the Retail Council and undertaken by EY shows the revenue generated with a $0 low-value threshold (LVT) on goods will be substantially greater than the cost of administration under a point-of-sale collection method.

“Under this collection system, a $0 threshold on goods will result in a net increase in GST collections of more than $1 billion in 2015/16, rising to $1.7 billion in 2020/21.

“Retailers welcomed initial steps announced by the Federal Government in May to address the integrity of the GST on digital products and services however the Retail Council highlighted this would create further imbalance and goods would need to be swiftly addressed. 

“The commitment by COAG Leaders today recognises the need for action to ensure similar types of goods and services consumed domestically are taxed in the same way, irrespective of if they are purchased from a local or international retailer.

“Our submission to the Tax Discussion Paper highlighted the importance of ensuring our tax system is fair and efficient. We are encouraged so see our Leaders maintain an open mind on tax reform and recognise the importance of maintaining principles of fairness and efficiency in discussions about the design of Australia’s tax system.

“The Council of Financial Relations Meeting in August will be an important next step in progressing this tax integrity measure to ensure our tax system that is fit for purpose in the modern economy and enables governments to continue deliver important services to Australians,” said Anna McPhee.