Kate Law, Nick Kallinikios and Michael McAuliffe discuss the Senate Committee hearing into the taxing of online low value imported goods and the potential for a delay to the implementation of this legislation.
“It’s going to end in tears for someone” claimed representatives of the Freight & Trade Alliance at last Friday’s Senate Economics Legislation Committee’s public hearing into the taxing of online low value imported goods.
When online retailers, logistics providers, academics and industry bodies fronted the hearing, there was consensus on the need to level the playing field for Australian retailers who compete with overseas retailers, however, witnesses could not agree on the method of collection. The method proposed is a hybrid of imposing the goods and services tax (GST) liability on intermediaries and vendors.
A tax with a low compliance rate, high compliance costs, that does not raise sufficient revenue when carved amongst the states and threatens to create suboptimal behaviour. These were some of the criticisms levelled by witnesses in relation to the Treasury Laws Amendment (GST Low Value Goods) Bill 2017. Witnesses were overwhelmingly critical of the proposed hybrid model and the limited consultation period.
While questions were raised as to who is best placed to collect the tax, Chair of the Committee Senator Hume expressed sympathy with overseas vendors selling their goods on well-known online platforms who individually would not breach the $75,000 annual GST registration threshold but for whom sales to Australian consumers would require GST to be levied from the first dollar of revenue earned.
Amid warnings from the Australian Taxation Office of garnishing revenue flows or assets of organisations that deliberately choose not to comply, some online retailers and academics suggested it may be easier for online operators to geoblock Australian consumers than comply.
Senator Ketter questioned witnesses on whether a model based on logistic providers collecting the GST would deliver a higher rate of compliance. However, Treasury admitted they were in breach of the government’s best-practice guidelines by not preparing a Regulation Impact Statement for the new measures.
While the Australian Retailers Association urged the Committee not to delay the start date, preliminary comments by the Senate Committee suggest they will recommend a delay in implementation beyond 1 July 2017.
The Senate report is due for release 9 May 2017.
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.