Australia’s “Amazon.com” tax

The Australian Treasurer recently announced that Australian State and Territory treasurers have agreed the GST should apply to cover online transactions where overseas suppliers sell goods under AU$1,000 to Australian consumers. Call it the “Amazon.com tax”?

Australia Post delivery van
Australia Post delivery van (by OSX (own work) [Public domain], via Wikimedia Commons)
This mirrors the recent proposal to apply GST to supplies of digital products and services from overseas providers to Australian consumers, the so-called “Netflix tax” (see my previous post).

Why?

In Government speak, the change would “promote greater integrity in the tax system” and to help to “level the playing field” for Australian retailers.

How would this be done?

The proposed approach for collecting the GST on imported goods is to reduce or remove the “low value importation threshold” for goods from its current level of A$1000 to say, A$20 or even zero.

Also to rely on overseas suppliers registering for, collecting and remitting the Australian GST. Presumably the latter requirement is aimed at minimising the compliance costs for collecting the GST on these imported goods.

When would this happen?

The Government has yet to release any draft legislation, but the Treasurer’s announcement indicated the new GST arrangements would start from 1 July 2017 (which would match the expected start date for proposed changes to inbound digital supplies), or possibly sooner.

What should overseas suppliers do?

Overseas suppliers who have Australian turnover over A$75,000 or more would need to register for and charge Australian GST (currently 10%, but could rise to say 15%).

For the moment, these suppliers should (if not already) change their sales terms to allow them to “gross up” the purchase price by an additional amount on account of Australian GST. This would align with the usual contractual practice for GST on onshore sales.

Of course, until we see the draft legislation a number of questions will remain unanswered. Some of these are:

  • Will an overseas supplier who sells through a shared platform (e.g. Amazon.com) need to register for Australian GST, or will that privilege fall to Amazon itself?
  • What “supplies” (in GST language) will go towards the AU$75,000 registration threshold?
  • How will an overseas supplier work out the customs value (or “CIF value”) of their goods, in order to charge collect and remit the correct amount of GST?

My 2 cents worth

On the one hand, I hope this change (presuming it goes through) meets the revenue forecast so that the Government can pay for personal and business tax cuts elsewhere. But I doubt it will play out that way.

This move smacks of pandering to big industry players. That is to say, I cannot recall buying anything online in order to save a merely 10-15%, as the savings are usually much higher.

Perhaps worse, this change would do nothing to motivate Australian onshore sellers to improve their game.

Presumably this change, if it is implemented by reducing or removing the low-value importation threshold, would also mean that Australians who travel overseas and return with new purchases might also need to pay GST on those purchases. (For the moment, let’s leave aside the question of whether the goods purchased overseas have become the shopper’s domestic property at the time they are brought into Australia.)

What do you think? Would needing to pay an extra 10% change your buying behaviour?

Australia’s “Netflix” tax

Taxes signpost
Recently the Australian treasurer Joe Hockey announced that the Australian Government is considering extending the Goods and Services Tax to also cover intangible services such as internet streaming (eg Netflix), music downloads (eg iTunes) and e-books (eg Kobo and Amazon) that are sold into Australia. This could make buying online services 10% more expensive.

Generally, no GST is payable on sales other than goods or real property by overseas sellers to Australian to private buyers. But if the Government’s proposed “Netflix tax” becomes law, GST would apply to overseas sellers’ “supplies” of music or video streaming and downloads (or the legit/legal ones, at least!) and other internet-delivered services to Aussie consumers.

Why do this? The Treasurer says that this is an “integrity measure” for Australia’s tax base, and in line with the OECD position that that GST should be charged at the source regardless of where the supplier is based. Other proposals we’ve heard include raising the GST rate (currently 10%) or lowering the low-value threshold for imported goods (currently AU$1,000) but these might be more politically challenging or simply cost too much.

What would this mean?
For consumers – The price you pay for streaming services and downloads could go up by as much as 10%. And while I can’t recall hearing anyone specifically naming Apple’s AppStore or Google Play in this context, I see no reason app sales or even cloud-based services would be excluded.

For off-shore sellers – There would be many practical problems in trying to collect GST from an overseas seller, though arguably this might be easier if you sell through a centralised online middle-man like a Google Play or Apple’s AppStore, or somehow the tax gets collected from the customer directly. But generally as a seller you could be required to remit GST from your sales to Australian customers. So unless you agree to give up 10% of your selling price from Aussie customers you might think about adding a GST “gross-up” clause to your sales contracts, to allow you to collect an additional amount for GST from your customers. As always, consult a lawyer 🙂

G’day, eh? We are Aussies – January 26, 2015

It’s official, today we are Aussies! This morning Anna and I joined 620 new citizens to take the Australian citizenship pledge at Brisbane City Hall.

Play the slide show

Do we now speak with perfect Aussie twang, enjoy the taste of Vegemite or magically understand the rules of cricket? Uh, no – and especially not the cricket!

After the ceremony, we enjoyed a fabulous lunch with great Aussie friends. Thanks to Fiona for putting on lunch, and to Fiona, Kate, Terri, Kaelene and Sharon for the Aussie welcome and laughs.

What’s next? Perhaps we should learn the lyrics to the Australian national anthem. Anyone know whether is the “national anthem of STRAYA” or “Advance Australia Fair“?

Oh yeah, and there is an election on in Queensland next Saturday – voting compulsory.

Costco in Brisbane – June 21, 2014

When living in Canada, I would have questioned my sanity if I had suggested a visit to Costco on a Saturday. So when Costco opened in North Lakes, Brisbane about a month ago, we figured it’d be smart to let things cool off for a few weeks before we gave it a look.

New members stay left, online sign-ups on right
Registration line-up

We arrived at the North Lakes store a little before 3pm North Lakes, Brisbane. The parking lot was overflowing, cars were parked up and down the street, and the “gas” queue was 10-cars deep for each pump. However we lucked out on finding parking in the lot and made our way over to the store entrance.

It was like trying to get into a rock concert! There were hundreds of people waiting to take out memberships. A team member handing out clipboards and pens suggested it would likely take an hour to get through. And although several people bailed from the line up, we wondered if we would get any chance to shop before 5pm closing.

Membership desk
I can’t see the difference, can you?

We thought we’d be smart and join the shorter queue for pre-registrations while filling out our application via smartphone!). But in the end, the line of people using paper applications actually moved faster by about 10-15 minutes, and it was 4.10pm before we had a membership card.

But the moment we stepped into the new warehouse, our fondest memories of bulk-buying came back to life: Oversized shopping carts, the smell of rubber tyres mixing with the aroma of baked goods, cashiers shouting “member service…” etc.

Costco membership card
Aussie membership card

There was everything you’d expect of a Costco in Canada or the USA – the gleaming white goods, jewellery (but a much smaller selection than in Costco stores elsewhere), 60-inch TVs and assorted electronics, piles of jeans and shirts, crates of bubble-packed stationary (96 pens, anyone?), kilometres of toilet paper, even “Tide” brand laundry detergent (not seen elsewhere in Oz), a range fresh and frozen foods, etc. And of course, Kirkland Signature everywhere!

For better or worse, the North Lakes store is virtually indistinguishable from other Costco locations, at least the North American ones. Even down to the fluorescent hazard cones with the warnings written in Spanish!

Costco Australian menu
Spot the Aussie menu items

You really need to look closely to notice any difference. We spotted the 1kg tubs of Vegemite on offer – and the Aussie pie on the food court menu ($3.50) is a dead giveaway, but it is next to the $1.99 hot dog + large Pepsi!

We finished off our visit with a trip to the gas (petrol) station. And why not? The Costco price was $1.37 per litre, or $0.20/ltr cheaper than at competitor fuel stations. It’s too bad Costco is 45 minutes away!

Dunedin and 2014 Australian curling championships – June 7-8, 2014

We have new photos to share with you! Scenes from the curling and views of Dunedin.

The census vs privacy concerns – August 7, 2011

Tuesday, 9 August 2011 is census day in Australia and Aussies will be asked to describe their their age, profession, religion, income and the family makeup in a series of personal questions.

Census question 60 is whether people want to opt-out of having their census records made available in future to historians. If you answer yes, your census information will be kept by The National Archives and made available in 99 years. If you answer “no”, your census details will be destroyed once the statistical data has been aggregated by the Australian Bureau of Statistics.

A survey by Ancestry.com.au found one third of Australians plan to answer “no” to Question 60, even though 80 per cent of people surveyed said that preserving their family history was important to them. In the 18 to 34 age range, 40 per cent said they would answer “no”, and 68 per cent of them identified privacy concerns as the reason for doing so.

As much as I am an advocate of “informed consent”, a census is an important snapshot about the population at the particular time it is taken. Why are people concerned about sharing the data, 99 years from now, after we pass on?

Is it because we don’t want the government to know too much about us? They already do, but in general, data matching rules prevent government from putting all the pieces together in one place.

Is it because we want control over when and how the information is disclosed? Maybe, but then again, we choose (whether directly or implicitly) to disclose heaps more privacy-invasive data about ourselves everyday, on websites like Facebook, Google+ and Foursquare and while shopping, under retailers’ loyalty programs such as Woolworth’s Everyday Rewards.

Is it because storing too much data in one place provides too personal a snapshot? No, and see previous point.

I wonder whether it has to do with the way the question is phrased. I mean, when Facebook wants my permission to use facial recognition (or more accurately, whether I want to opt out) to automatically identify my friends in photos without their permission, Facebook asks me whether it should “suggest photos of me to friends”.

The Ancestry.com.au survey revealed that 7 in 10 Australians are unaware that by saying no (or by not answering the question), their census information will be destroyed.

Perhaps question 60 should instead ask, “Do you want your great great grandkids and historians to be able to learn a little about you?”