Changes to GST on $1000 LVIT are pending

[AUbicycles]

Resurrecting this ongoing discussion, Importer FE Sports (Stages, Bonk, Wahoo, etc) picked up a News Limited article on pending changes to the LVT - Low Value Threshold . It is a good discussion and I am drawing out some of the key parts.

LVT has now become LVIT - Low-Value Import Threshold and in brief is the value at which GST and import duty is applied, this is currently $1000. Here are further details and how it is calculated: The Ultimate Guide - Customs charges on overseas orders



Context
TREASURY has confirmed it has done no modelling on the economic impact of applying the GST to overseas online purchases under $1000.
It comes as state treasurers prepare to meet in Canberra today, where they are expected to sign off on lowering the low-value import threshold (LVIT), agreed to in principle by state premiers at last month’s COAG meeting.


Rational
... If they agree, the Federal Government would then need to introduce legislation to push through the change. The retail industry has been pushing for the threshold to be lowered to “level the playing field”, arguing the tax-free purchases unfairly penalise Australian businesses.


Process
Consumer group Choice warned on Thursday that changes to the threshold could lead to consumers paying a ‘parcel pick-up’ tax when buying goods from small online retailers not registered with the Australian Taxation Office to collect GST

A 2013 report by Ernst & Young, commissioned by the National Retailers Association, suggested Australia introduce a similar system to the UK, which would involve two different processes for collecting GST.

Large retailers with sales over $75,000 per year would be required to register with the ATO, charge the GST upon purchase and pay the tax to the Australian government.
Smaller operators, if they choose not to register, would have to have their packages assessed for GST liability by Australia Post or a private cargo operator, which would incur a processing fee.


Issues
“It would also throw online retail into chaos, as uncollected parcels ordered from unregistered businesses are left to clog up post offices across the country.
“Paying almost $17 in fees to collect $2 in tax would be crazy economic policy. It’s got nothing to do with raising revenue or removing a 10 per cent price difference — it’s about punishing consumers to protect local retailers from global competition.”


Choice Magazine says
Choice says it supports levelling the playing field, but only if the LVIT can be reduced while raising net revenue.


Next Steps
“Any change to the low value threshold and the GST requires the unanimous agreement of the states.”



source: News.com.au
(note - potential paywall and autoplay content).

[jasonc]

time to send some 1c items to joe hockey from china

[Carrots]

If it can be done cost effectively, I have no problems paying GST on something I buy from O/S... But that still won't bridge the gap when I'm paying 40-50% less than a local retailer.

Perhaps some investigation into why we're paying such inflated prices locally might be of more use.... But then no one would actually want to admit to some of the likely reasons!

[Phil]

According to this article in Australian Financial Review http://www.afr.com/news/policy/tax/trea ... 823-gj5qz9" onclick="window.open(this.href);return false;, there has been just been an agreement reached between the Commonwealth and the states to charge GST on all online purchases from 1/7/17.

Apologies this may be behind a Paywall.

[AUbicycles]

Interesting, the details are hidden in the article from Aug 24. 2015 in the Australian Financial Review. This is the quote:

At the treasurers' meeting on Friday, Mr Hockey and his state counterparts agreed to slap a 10 per cent GST on all overseas purchased online goods from July 1, 2017

[jasonc]

no mention of duty and guarantee the delivery services will want their cut...