From June next year, the federal government will start collecting the Goods and Services Tax from online retailers. That means prices will increase to accommodate the 10 percent sales tax, which currently only applies to online purchases over $1,000. So we've got got five and a half months of GST-free online shopping leftâ€”here's hoping you're making the most of it.
If this wasn't bad enough, consumer group Choice has just revealed that a loophole in the new GST regulations will allow the government to block overseas websites that don't comply with the rules. Under the Telecommunications Act, the government has the power to force internet service providers to block retailer websites in order to "[protect] the public revenue."
It's unlikely that large overseas companies like Amazon and ASOS won't obey the Australian government, but niche clothing stores, makeup brands, and technology companies who don't want to increase their prices will do their best to avoid complying with the new regulations.
These kinds of stores are successful in Australia either because they sell products you can't buy here, or they sell things that are available here but at far cheaper prices. Either way, if these retailers add GST, they're going to lose some market share. Luckily, online stores with annual profits less than $75,000 won't be required to collect GST.
If the government does block these websites, it says the move will be a last resort. A Department of Treasury spokesperson told Choice that the government will ask all online businesses to comply with the regulations first, then attempt to use existing treaty arrangements and international trade laws to force them to do so. If that doesn't work, they will block the sites.
These new online GST regulations were originally announced last year by former Treasurer Joe Hockey. They followed years of pressure from Australian brick-and-mortar retailers like Harvey Norman, which long argued that overseas online retailers were cutting into local profits.
While many online retailers will probably comply with the new rules, you can expect online shopping to become more expensive and possibly more limited next year. Products from streaming services like Netflix and software companies like Microsoft and Google will also experience a 10 percent price hike.