The Australian Labor Party is once again urging the federal government to postpone the commencement date for collecting GST on low-value imported goods.
Under the new legislation, originally announced in the 2016 Federal Budget and introduced to Parliament in February, overseas businesses with an annual turnover of more than AU$75,000 will be required to register with the Australian Taxation Office (ATO) to collect GST on all goods sold online, including purchases under the current low-value threshold of AU$1,000.
The measure, which was set to commence on July 1, should come into effect in 2018, according to the federal Opposition, with some “sensible” amendments to be supported by the crossbench.
“This government has given Australia’s businesses and consumers a fortnight to change their models and implement the new regime,” Shadow Treasurer Chris Bowen told MPs on Wednesday. “This is a very significant issue.”
Ecommerce giants eBay, Alibaba, and Etsy had previously argued in a Senate hearing in April that they are not sellers, as they neither own the goods sold on their respective platforms nor sell or supply them, meaning they should not be subject to enforcing the GST laws.
With the use of third-party payments systems such as PayPal, eBay said it isn’t even involved in the payment or shipping of any goods sold on its platform.
“We are different to online retailers … we merely connect buyers with sellers. We are an online version of Westfield,” eBay’s managing director for Australia and New Zealand said. “Just like Westfield, eBay is not in a position to collect GST from the sellers that sell on our platform.”
Labor also wants the Productivity Commission to identify and formulate best practices around implementing the measure by the end of 2017, with eBay also previously arguing that the process around GST changes had been “one of the least open” in recent times.
“Certainly, if you compare it to the Netflix tax, they were given a very lengthy period of time to determine how the actual Bill that was released on Budget night would apply to them and what they could do,” an eBay spokeswoman said.
“What we’re being asked to do here is as the Bill was introduced into the House of Representatives in February, and we’re being asked to comply by 1 July — it’s near impossible.”
In a submission to a Senate inquiry, eBay described the changes as a “hastily introduced”, “counter-productive”, and “unworkable” Bill that will “harm Australian consumers in many ways”. It even threatened to block Australians from using the platform if the changes are to go ahead.
However, eBay notified customers via email on May 31 about the new GST collection regime.
“Business registered for GST will not be affected by this change if you register your Australian Business Number (ABN) with eBay,” the company stated in the email.
The federal government found that there are more than 3,000 overseas organisations that would be subject to the current GST collection proposal. The majority of sellers, or 38 percent, are from the United Kingdom, while the United States accounts for approximately 27 percent, followed by China and Hong Kong, both of which account for 8 percent of overseas sellers.
In response to how it would identify and penalise non-compliant organisations, the ATO did not rule out the possibility that such organisations could have their websites blocked.
“I’m aware the [website blocking] provision exists, the ATO hasn’t applied that provision previously, so at the end of the day we’d have to look at whatever was available to the ATO as we progress down the path of encouraging organisations to comply,” the ATO said in April.
The ATO admitted that it is relying on an overseas organisation’s “good will” and the possibility of reputational damage to prevent them from skirting the legislative requirement to collect GST on its platform.
“If we were to notify another jurisdiction that an organisation in their jurisdiction was deliberately not complying with a known regulation in Australia, then the revenue authorities in that jurisdiction would then have the information to know an organisation’s attitudes towards compliance,” an ATO representative said in April.
The Australian Retailers Association (ARA) recently kickstarted a campaign calling on politicians to pass the legislation.
The group has been lobbying the government to reduce the threshold from AU$1,000 to zero to help provide a “level playing field” for Australian retailers.
“Australian retailers are continually having to pay GST while their foreign counterparts do not, and local online and bricks-and-mortar retailers are sick of the constant delays in implementing this tax equality issue,” ARA executive director Russell Zimmerman said in a statement.
“We do not want to take away the right for consumers to purchase from overseas. However, we do need to provide a level playing for Australian retailers.”