GST changes flagged but shoppers won’t be charged this Christmas

Predictions on how the federal government could collect GST on more low value imports are flying around the public forum in the wake of a decision to delay lowering the threshold for applying the GST on imports from $1000 to a suggested $20 value.

The push is being spearheaded by retail peak bodies the Australian National Retailers Association, the Australian Retailers Association, Myer chief executive Bernie Brookes, Harvey Norman co-founder Gerry Harvey and the New South Wales Treasurer Mike Baird.

Yesterday state and federal treasurers met in Canberra to discuss the findings of a report commissioned to look at the costs and benefits of lowering the low value import threshold from its current $1000 limit.

The Australian Financial Review states the outcome was to lower the threshold by March 2014 and to set up a working group to work out how. Other changes to the GST have been suggested but do not have a consensus among state and territory leaders.

Among the possible models being suggested is a scheme which forces offshore retailers to collect the GST and pass it on to the Australian government. Another is that the estimated 58 million parcels a year be checked and GST charged.

The AFR stated in a comment piece by Geoff Winestock that if the threshold were $100, then the government would spend $15 to collect $22. If the threshold were nil the government would be spending 66% more than what is collected, according to Treasury estimates.

But The Australian reported that modelling presented to treasurers yesterday said the set-up costs of lowering the threshold would be “substantial” and the desired $20 threshold among activists like Baird and retailers “would be expensive to implement because it required so many parcels to be checked”.

Federal Treasurer Joe Hockey has said he wants consensus among the states and territories for a change in the tax rules, and has also ruled out changing the GST in this term of government.

On Tuesday, Brookes took the stage with Harvey to issue the caution that their huge retail companies could send in products from New Zealand to exploit the same loophole that exempts offshore retailers from GST on items under $1000.

ARA executive director Russell Zimmerman said the retailers’ threat is very real, and that others have mentioned it as an option.

“I’m not going to tell you who else I’ve heard, but I’ve heard another couple of organisations are in exactly the same boat as that, and they’ve talked about it,” he told SmartCompany.

“Rather than do it through their local websites here they’ll do it directly from overseas, why wouldn’t they? A lot of their products come from overseas so why wouldn’t they do it?” he said.