Scott Morrison: Online firms ‘had years to prepare for GST’April 20, 2017
Scott Morrison: Online firms ‘had years to prepare for GST’
Ben Butler, The Australian, 18 April 2017
Scott Morrison has dismissed fears of tax experts and online retailers who say the industry has not been given enough time to get ready for new legislation extending the GST to imports worth less than $1000.
The Tax Institute, which represents Australia’s tax accountants and lawyers, has told a Senate inquiry the new laws are too complicated, lack teeth because goods are not stopped at the border and are being introduced too quickly.
Global online retailer Amazon, which is tipped to be on the verge of setting up shop in Australia, and fashion website ASOS have also told the inquiry the timeframe to implement the law is too tight.
Legislation eliminating an exemption from GST for imports worth less than $1000 is due to take effect from July 1, but the earliest it can pass the parliament is next month.
“The model proposed was announced in August 2015, providing years for affected providers to prepare for the changes and is consistent with the direction being pursued internationally,” the Treasurer said. “We will continue to work to resolve implementation issues. However, we will not step back from ensuring our tax base is fit for purpose in the new digital economy.”
The new law is under scrutiny by the Senate Economics Committee, with a report due next month. Mr Morrison said the legislation was designed to “close out loopholes that multinationals and big business are using to avoid paying Australian tax”.
“It creates a fairer tax system for Australians and supports Australian small businesses by creating a level playing field against foreign competitors,” he said.
“These changes ensure Australian businesses, particularly small retailers, do not continue to be unfairly disadvantaged by the current GST exemption that applies to imports of low value goods. Millions of Australians rely on jobs in retail and it is unfair that major entities continue to facilitate sales into Australia which are GST-free.”
However, in a submission to the inquiry last week, the Tax Institute said it was concerned the law would fail to have any effect.
“We are concerned that the proposed amendments are a ‘one size fits all’ approach and do not provide sufficient powers of enforcement of the law, nor sufficient ‘encouragement’ to the range of overseas suppliers (from large to small) to adhere to the proposed legislative changes, either due to a lack of awareness or by deliberate intent,” Tax Institute president Matthew Pawson said in the submission.
He said that given the bill was unlikely to pass until next month, overseas suppliers had “very little time” to get their systems in place to comply with the law.
This contrasted with the 18 months Australian businesses had to implement the GST when it was introduced in 2000. “Given the difficulties the ATO is likely to have in enforcing the new rules, it will require significant goodwill from overseas suppliers for them to voluntarily comply with the new rules,” Mr Pawson said.
“The short timeframe in which to implement these new rules is not only unrealistic but also likely to largely remove the goodwill of overseas suppliers that might otherwise be relied on for overseas suppliers to comply.”
His submission adds weight to calls by retail websites including Amazon, eBay and Alibaba to shift from the Turnbull government’s proposed model, where they would collect GST, to the model favoured by the opposition, where freight companies bear the cost of collecting the tax.
Freight companies, including German giant DHL and America’s FedEx, are vehemently opposed to any such move.
“It is our view that, in order to enforce the proposed legislation, it would be appropriate to put in place measures to identify and tax supplies from nonconforming overseas businesses at the point of import,” Mr Pawson said.
“To not do so would significantly undermine the integrity of the proposed system.
“Although we recognise that any measure to tax at the point of import would likely slow down the processing of low value parcels at the border, cause delays in delivery times and potentially be costly, we would view this approach as the only viable enforcement approach.”