Back in May this year, former treasurer Joe Hockey announced draft laws to extend GST to digital purchases such as movies, music, games and e-books purchased from overseas retailers.
Dubbed the 'Netflix tax', it is expected to bring in around $350 million and level the playing ground for Australian digital retailers, with Microsoft, Adobe, Amazon, Google and Apple all in the government's sights.
Car sharing service Uber, room rental service Airbnb, subscription video giant Netflix could also see GST of 10% levied on their products and services purchased by Australians. Some offshore retailers already collect GST such as Apple's iTunes and Google's Play stores.
New Treasurer Scott Morrison announced that draft legislation was being released today, with an expected implementation date of July 1, 2017, giving companies time to set up the necessary processes to collect the tax.
This is in addition to the government's plans to lower the GST threshold on goods and services bought offshore from $1,000 to close to zero. Company's like Amazon already collect taxes on behalf of countries like the UK for purchases made by UK citizens, so it shouldn't be as difficult as most people think to collect GST from offshore companies. For Australian retailers like JB Hi-Fi Limited (ASX: JBH) which are forced to add GST onto digital purchases, a level playing ground is good news.
It's all part of the current government's plan to rein in spending and increase revenues. Discussion over an increase in the 10% GST rate is also on the cards.
The GST was originally introduced on July 1, 2000, long before we had even heard of digital downloads. Essentially, the government's new legislation is just catching up with the times, but Australian consumers used to not paying GST on digital purchases need to be prepared to add another 10% to the purchase prices.
