GST free threshold removal effect on shoppers and overseas bike shops

[g-boaf]

What this makes me do is just spend very little. I won't buy new wheels or fancy new things I don't need. I buy just the parts I need and nothing more than that. And I do my own bike servicing so bike shops don't get money from me that way either.

As for the Gerry Harvey's of the word, I don't buy anything from retailers like his either.

[Howzat]

What this makes me do is just spend very little. I won't buy new wheels or fancy new things I don't need. I buy just the parts I need and nothing more than that. And I do my own bike servicing so bike shops don't get money from me that way either.

Because they closed the GST loophole?

[queequeg]

The import process for items under $1000 is not changing. In fact, Customs has done a massive buck pass and said that from their point of view, anything under $1000 value is assumed to have already paid GST and is treated as a domestic parcel.

During phase one.

But don't be surprised that when the majority of parcels coming in are GST compliant they flip the switch and start intercepting everything.
Currently impossible because there are just too many. But when majority are cooperating it becomes easy to turn the thumbscrews on the remainder.
Objective will be to force the retailers to comply since customers will abandon them when they get slugged with a customs processing fee on top of GST.

I am sure if the ATO gave Customs the budget to do that, then they would. If you read the detail, there is nothing on the low value parcels to indicate whether they have paid GST or not. They have only introduced additional paperwork for overseas vendors that have collected GST for purchase of items over $1000, so that when the parcel clears customs that the purchaser is not sent a second request for payment of GST. That system is already in place (ICS).

For the low value parcels, Customs is not changing the process because the volume is too high. There is no customs processing fee for low value items. At present, customs charges add about $200 to the cost of an import. I know that because I imported a bicycle frame a few weeks ago. There was talk of introducing a $5 processing fee on all low value items, but that quickly got put to sleep.

Really, at the moment, this whole thing is just an ATO thought bubble. It's not the ATO that has to deal with the border clearance process. If the ATO had to pay customs for it's services to extract the GST from everyone, it would be a loss maker.

[SheikYerbouti]

So really I'd better buy a year's worth of consumables and stuff on June 30?

[MichaelB]

Meh, I doubt whether I'll do anything different.

The OS stuff is usually cheaper by far, but now that difference will be reduced to 'far minus a little bit'

[Jawa]

Im not really savvy with this stuff, simple question though.

I order a few items from Wiggle and the total is $100 and is delivered by Aust. Post
Will that order now jump to $110 at checkout?

[Jmuzz]

Wiggle has a dedicated au site with different stock and pricing (eg there are no helmets on the Au site because they don't stock AS approved helmets).

So they will just update the listed prices like any Aus store.
They already add VAT and other taxes depending on shipping destination selected so really this is nothing new to them.

[Jmuzz]

If the ATO had to pay customs for it's services to extract the GST from everyone, it would be a loss maker.

AusPost and the international couriers already have the facility to charge on delivery.
It costs customs almost nothing, fees just pass onto user.

The point is that phase one is to get the major sellers complying with GST collection at their end.
US, UK, EU will all comply.

China such as AliExpress, they may be stubborn.
Though when govt orders customs to throw everything identified as coming from Chinese bulk shippers into a holding pile for 3 months "awaiting processing" then eventually something has to give.

[Tequestra]

Another assault on poor Australians by the dreaded GST. Not all of us failed mathematics at high school, y'know Scott.

I am still puzzled by the crossing of international boundaries by the ATO with their concept of 'consumerism'. when the products involved are produced in the country that they inhabit, and are IMHO rightfully * subject to the taxations by the governments of that country. Should not China be allowed the option of introducing a GST of its own, in which case, then they, (like Australia does for Chinese buyers) could be charging the tax to Australians who order things online. It is not our government's money because there is nothing to consume in Australia unless the other country produces it.

I suppose this applies already to purchases over $1,000 but I still think that it is double-dipping. It is not fair to tax consumption of goods produced outside the borders of Australia. That tax is the domain of the producing nation.

* Eg. Through Australian Customs (border force), the ATO could indeed refund the GST paid by Chinese tourists during their visit at the departure lounge, as VAT refunds are apparently available in other countries that I have travelled through. Perhaps the ATO does this already for foreign nationals visiting Australia? I would no know. If they do not, then they should not try to charge GST on products purchased in other countries by Australian citizens either.

[AUbicycles]

Objective will be to force the retailers to comply since customers will abandon them when they get slugged with a customs processing fee on top of GST.

Is this a guess or a realistic scenario? While we have identified that there is some missing information in the processing 'what happens when an order comes through where it is identified that GST should have been collected, but wasn't' - can it be assumed that it is now the customers problem that customs will also add a processing fee which the customer has to pay because of the retailers failure?

Some of the answers are already available.

Requirements for customs documents

You must ensure that the relevant tax information is included in the customs documents (such as a self-assessed clearance or import declaration) for goods if you are registered for GST and you are either:

responsible for GST as the merchant who sells low value imported goods
an electronic distribution platform operator or re-deliverer who is treated as the supplier of low value imported goods.
You do this by:

including the relevant information on the commercial documents, and
requesting that this information is included by the customs broker or transporter who completes the customs documents on behalf of the importer.
If you are an electronic distribution platform operator, you will need to ensure that the merchant does this on your behalf.

This requirement applies for each supply where you:

charge GST on a sale of low value imported goods
do not charge GST because the customer is not a consumer (if so, you must include the customer's ABN), and
do not charge GST because you applied the exception for multiple goods that total over A$1,000.
The tax information you must ensure is included is:

your GST registration number (this is either your ARN or ABN)
the customer's ABN (if you have it)
whether GST was charged on the goods
The receipt you issue to customers must contain all of the information needed to fill in the customs documents when GST applies to the sale.

Penalties may apply if you fail to take reasonable steps to ensure that the relevant tax information is included in the customs documents.

source: ATO

[uad782]

What is forcing foreign retailers to comply with this requirement? Will the ATO send police to the UK if Wiggle don’t follow this?

[AUbicycles]

@uad782 - retailers with smaller sales volumes ( < $75,000 to Australia) wont be affected but I wonder how customs can accurately track this sales volume. There appears to be an element of expecting compliance but some retailers simply wont even know.

ATO suggest that there could be fines but then there is the problem of jurisdiction and cost. I think overseas companies may have a fairly good argument when they ask why they are responsible... shouldn't this be dealt with during the import (and it works with items over $1000 - retailers don't collect taxes, why does it change for low value items).

Customs could block deliveries from a company and the consumer would suffer though would be able to claim with the credit card company so eventually should lose out financially although may be competitively disadvantaged.

An interesting thing to note is that in the EU with the common trade zone, each country still have different tax rates which can be quite complex. They do have a duty to collect tax (e.g. a Spaniard orders from the UK) but the tax system is also unified so bills are settled but not individually.

Essentially the Australian precedent is that every single business across the world that wants to trade and meets the conditions has an admin burden. Imagine they had the same burden for every other nation or economic zone so a single retailer needs to register and document for multiple tax authorities and settle bills with differing financial years and the currency exchanges... clever it is not. In fact, it is a work-around solution to attempt to save customs from the massive overheads because it is financially not viable.

[Ross]

It will be interesting to see how it is implemented, I'm sure it will be smooth and straight forward with large companies like Wiggle, but not sure how a lot of companies from various parts of Asia that sell cheap trinket type items through eBay or AliExpress will go.

As far as not being financially viable to collect the tax, that has never worried the govt in any of it's other activities/services. Roads, schools and hospitals and public transport are just a few that spring to mind.

[Jmuzz]

Essentially the Australian precedent is that every single business across the world that wants to trade and meets the conditions has an admin burden. Imagine they had the same burden for every other nation or economic zone so a single retailer needs to register and document for multiple tax authorities .

If the payment gateway supports it then it's zero overhead. Just a matter of gateway fees, which they charge anyway.

Eg PayPal can easily divert 10% to ATO account in the name of the sellers ABN when the currency or shipping destination is Australia.

There aren't many payment gateways and the "homemade" ones are usually full of holes so you should always use the PayPal option which hides CC details from merchant, almost everyone supports PayPal already. Recent strengthening of data protection and know your customer mean it is very hard to comply with all the complications DIY.

[Jmuzz]

What is forcing foreign retailers to comply with this requirement? Will the ATO send police to the UK if Wiggle don’t follow this?

All they have to do is delay packages at customs, throw in a pile for a couple of months. That is a huge penalty which will destroy a sellers Australian reputation.

In this first phase they don't really care, eBay and Amazon and a few Aus companies with foreign warehouse fronts have no choice because they have Aus assets which can be punished.
See how many of the others comply voluntarily and then start working on strategies to put pressure on the others.

Companies like Wiggle will comply. The interesting one will be China.
But like I said, if everything from China lacking a database linked barcode starts taking an extra month to be "inspected" then China sellers will probably follow the path of least resistance.

[Trevtassie]

I'm in the 10% won't make much difference brigade, not when the "buy a new BMW for the distributor" tax is so high in Australia. And the "nah, we don't bother bring that in" factor kicks in....

[AUbicycles]

Relying on commercial third parties to collect and manage tax... no thanks.

The book keeper want a much clearer internal tracking and also clarity that when they collect payment that includes a 3rd party tax, that this can properly be recorded as a liability. You need to have the control.

However, if 3rd party commercial payment gateways want to push this as a service, it still needs to be properly integrated into the shopping system and it may be an attractive option for some retailers.

[Thoglette]

Relying on commercial third parties to collect and manage tax... no thanks.

We do that already for GST. The ATO takes the GST that I (a third party) collect. Same as PAYG and super, it's up to me to do it.

Certainly, it's open to fraud and abuse. Just like super and payroll tax (anyone been washing dishes in Melbourne lately?).

I don't outsource my payroll and super but plenty of companies do. Not all of them bother.

[fat and old]

Relying on commercial third parties to collect and manage tax... no thanks.

We do that already for GST. The ATO takes the GST that I (a third party) collect. Same as PAYG and super, it's up to me to do it.

Indeed. Add on redundancy and LSL as well. I’m reminded of the drivers in Qld who claimed there would be Armageddon when the safe passing laws allowed crossing the centre line.

[V17L]

I dont quite follow why Gerry has pushed this so much. I dont get my couch from oversea, nor bedding or funiture, or even an electric jug. Maybe his computer section, but even then i would guess the overseas imports would be chicken fed compared to his turnover.
Maybe he has fingers in other pies that i am not aware of that is affected but sub $1k imports. Does he have shares in a bike chain perhaps.
Secondly, has anyone seen any figures on what the fed gov expects to make out of sub $1k gst? perhaps looking at recovering tax from the big end of town would be more fruitful. Or has scomo got to show he has everything covered and max revenue for the gov.
It doesnt seem a winning strategy when compared to the propsed big company tax cut that has just been scuttled.

[DavidS]

I dont quite follow why Gerry has pushed this so much. I don't get my couch from oversea, nor bedding or furniture, or even an electric jug. Maybe his computer section, but even then i would guess the overseas imports would be chicken fed compared to his turnover.
Maybe he has fingers in other pies that i am not aware of that is affected but sub $1k imports. Does he have shares in a bike chain perhaps.
Secondly, has anyone seen any figures on what the fed gov expects to make out of sub $1k gst? perhaps looking at recovering tax from the big end of town would be more fruitful. Or has scomo got to show he has everything covered and max revenue for the gov.
It doesn't seem a winning strategy when compared to the proposed big company tax cut that has just been scuttled.

I don't know why either, but I do know that Gerry Harvey and his ilk undercut other shops by importing cheap furniture. They put local makers out of business. Now they have the hypocrisy to complain when they are subject to overseas competition. The competition from the likes of Wiggle (UK) and Bike24 (Germany) are not in low wage countries (not that Aussie businesses seem to be paying the wages they are legally obliged to anyway) so I'm really not sure what their excuse is.

As for the government, Scomo and co are very interested in collecting taxes from consumers and barely interested in collecting tax from business. The really insane thing about the GST on small purchases is that it is doubtful whether this will collect or cost money. The point of tax is to raise revenue, if this costs more than it collects then it is just putting on a show.

In principle I have no issue with all purchases being subject to the same tax - but if it ends up costing more to collect then they really shouldn't do this.

DS

[10speedsemiracer]

I dont quite follow why Gerry has pushed this so much. I dont get my couch from oversea, nor bedding or funiture, or even an electric jug. Maybe his computer section, but even then i would guess the overseas imports would be chicken fed compared to his turnover.
Maybe he has fingers in other pies that i am not aware of that is affected but sub $1k imports. Does he have shares in a bike chain perhaps.
Secondly, has anyone seen any figures on what the fed gov expects to make out of sub $1k gst? perhaps looking at recovering tax from the big end of town would be more fruitful. Or has scomo got to show he has everything covered and max revenue for the gov.
It doesnt seem a winning strategy when compared to the propsed big company tax cut that has just been scuttled.

With Gerry, it was Kogan that did the trick for him.
Gerry was losing $s on the Harvey Norman-specific models he bullied out of suppliers, specifically electronics and computing (so you couldn't price match). And trust me, he bullied them, saying he wouldn't stock their stuff unless they provided him with models/variants specific to his stores. In reality they were just rebadged lines, but the sales staff could hide behind different model names/numbers. The man is an idiot and has caused more damage to the marketplace than we know.
Agree with others in that there are easier ways to claw back taxation revenue than this format, which relies (naively) on self-compliance of an OS seller.

[V17L]

I had forgotten about kogan.
I do remember there use to be a lot of local homeware/furniture stores run by families around australia. That is until gerry came along with the megastores and buying power. Those families contributed to the community with sponsorship of local teams amongst other things. I dont see that as much in country towns now.
Kogan just came up with a diferrnt sales model. I have purchased stuff through kogan. Not bad. Some of his gray marketing like iphones sourced from overseas was a bit of a worry with warranty but more power to him.
Well, gerry may have his wish but i dont think it will put kogan out of business. Different sales models there.

Re scomo, imagine if he was PM.

[10speedsemiracer]

.....

Re scomo, imagine if he was PM.

I'm more worried about Dutton although ScoMo wouldn't do this country any favors....

[biker jk]

.....

Re scomo, imagine if he was PM.

I'm more worried about Dutton although ScoMo wouldn't do this country any favors....

I'm much more worried about the damage Bill Shorten would do to the country should he become PM.