"New laws due to start on July 1 should see GST collected on low-value imports. The question is, will overseas suppliers comply with Australian GST laws?" says UNSW Business School Lecturer in Taxation & Business Law, Kathrin Bain.
In the Federal Budget on May 8 we will see if the tax to impose GST on imports worth less than $1000 will be postponed again, as it was last year, or scrapped entirely.
"Collecting GST from low value imports may inconvenience the consumer and incur huge costs that defeat any tax raising purpose," Bain says.
Internet retail giant eBay has already threatened to ban Australians from buying from overseas sellers because of the GST plans for low-level foreign online purchases.
"The current plan is the 'vendor registration model', whereby overseas retailers who send parcels to consumers in Australia will have to register for Australian GST if their turnover exceeds $75,000 a year," Bain explains.
"But that is a fairly low level and would be subject to currency fluctuations. Will a small software company in China or a bookseller in Wales want to register with the ATO? It looks doubtful at the moment. Additionally, when it comes to domestic sales, the ATO has always taken the view that eBay is not the 'supplier' of goods for GST purposes.
"It is up to the individual seller, if required, to register for and charge GST. Under the legislation that will apply to low value imports, the liability to remit the GST applies to the operator of an 'electronic distribution platform' (such as eBay) rather than individual sellers."
Bain has researched the GST low value threshold and has concerns about enforcement of the new law. "When it was originally announced that it would be up to the overseas supplier to collect and remit GST on low-value imports, the then Treasurer, Joe Hockey, couldn't provide even rough figures as to how many vendors would be required to register," she notes.
"Unless the legislation can be effectively enforced, there will be low levels of compliance, resulting in a minimal increase in GST revenue."
Kathrin Bain is one of several UNSW experts who will give independent analysis and reaction to key budget 2018 measures in a roundtable discussion in Sydney's CBD. The event will be streamed live and available to download and watch later.
Watch live: 12.30pm, Wednesday, 9 May 2018 at http://business.unsw.edu.au/budget
For comment contact:
Kathrin Bain on 02 9385 9541, 0400 794 285 or firstname.lastname@example.org