A win for retailers: Review addresses charging GST on online purchases

Retailers have welcomed reports the Federal Government’s review into GST has recommended broadening the tax base to shore-up falling revenue – and online purchases may be at risk.

The recommendation comes after years of debate over the issue, with key retailers arguing the government needs to crack down on the so-called “uneven playing field”.

As reported by The Australian Financial Review, the report includes a recommendation to increase GST charges to make up for falling federal revenue.

If correct, lowering the local GST-free threshold for online purchases or charging a tax on offshore websites would be welcomed by the states, which have called on the government to pursue charging online stores.

“If this is really the case, then it’s welcome,” Australian Retailers’ Association executive director Russell Zimmerman told SmartCompany this morning.

Trevor Evans, chief executive of the National Retailers’ Association, says while he will await the government’s response before making a definitive statement, the news is “encouraging”.

The AFR quoted GST review panel board member and former New South Wales premier, Nick Greiner, as saying the report addresses the issue of lowering the threshold.

“We do deal with the question, yes.”

Wayne Swan said this morning he has received the report, but the government needs to conduct its normal due diligence before it issues a response.

The issue of GST collection has been a key debate for retailers. Two years ago, retailers such as Harvey Norman and Myer started advocating for the government to either lower the tax-free threshold in order to create a “level playing field” or just charge GST.

However, industry figures have pointed out price differences between domestic and offshore stores are usually much more than 10%.

But a recent report found that if the government wants to raise GST, it first needs to address inefficiencies in parcel collection and processing.

The problem is expected to come to a head this Christmas, with experts suggesting it will be the biggest year for parcels in Australia Post’s history. It recently announced a $2 billion investment in infrastructure upgrades to ensure parcels are delivered more efficiently.