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Australian Treasurers Agree On GST Reform

by Robert Lee, Tax-News.com, London

21 August 2015


Australia's federal, state, and territory treasurers have agreed to broaden the goods and services tax (GST) to cover overseas online transactions under AUD1,000 (USD732) but they failed to reach a consensus on removing the GST from feminine hygiene products.

Speaking after the Council on Federal Financial Relations Tax Reform Workshop, federal Treasurer Joe Hockey confirmed that he had put forward a proposal for the extension of the GST to certain overseas online transactions, which "relies on a vendor registration model as a method of collecting the GST for the states and territories." He explained that goods would not be stopped at the border, meaning that administration costs would be relatively low.

Hockey added that the states and territories unanimously agreed to his recommendation that the existing threshold for the GST liability be reduced to zero, to bring these purchases' tax treatment in line with domestic sales. Overseas suppliers will charge, collect, and remit the GST for digital and physical products. Only vendors with an Australian turnover of AUD75,000 will need to register and charge the GST.

The federal Government will draft legislation for the new arrangements to apply from July 1, 2017, Hockey said.

Attendees also considered a proposal put forward by the treasurers from Victoria, South Australia, Queensland, and the Australia Capital Territory to remove the GST from feminine hygiene products. Hockey said that, as there was no unanimous agreement, there will be no change to the existing GST arrangements.

"This was a productive meeting and I thank the Treasurers for keeping an open mind on how we can promote a better tax system. As you would expect, there was some strong discussion on the issues and while we didn't always agree on everything we have made good progress. The Australian people are looking to us to lead the reform process and to show that together the governments of Australia can constructively work together. Clearly there is still much work to be done and I will continue to consult with my state and territory colleagues and ensure that they are actively engaged in the Commonwealth's Tax White Paper reform process," Hockey said.

Hockey will report back to the states and territories on the options for additional tax reform at the next meeting of the Council on Federal Financial Relations in October.

TAGS: tax | commerce | goods and services tax (GST) | Australia | tax thresholds | ministry of finance | e-commerce | legislation | tax rates | tax reform | services

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