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Australian businesses to enjoy online GST exemption
Compared to the rest of the world, Australia ranks well below others in relation to the rise of online shopping and associated taxes.
GST is often a headache for businesses of all sizes.
From an accounting and finance perspective, the buy-in from each of Australia's state and territory treasurers to reduce the current tax-free threshold for offshore purchases is very positive.
Compared to the rest of the world, Australia ranks well below others with regards to the rise of online shopping and associated taxes, according to Assistant Treasurer Josh Frydenberg.
"In the United Kingdom they apply the GST to goods and services bought overseas online from 15 pounds; in Canada the threshold is 20 Canadian dollars; in the United States they apply their GST or VAT equivalent to all goods bought online from overseas," he told the ABC.
"The decision by the treasurers is a common-sense one that will help local retailers who are doing it tough."
Initial indications suggest Australia's threshold could fall as low as $20 which will help the financial situation of many businesses which are currently feeling the pressure on the bottom line. Of course, Australia is looking for a competitive corporate market, but this can't be at the expense of local businesses who have worked hard, often against the tide, for many years.
CEO of the Australian Chamber Kate Carnell explained one of the benefits of this move is to help retailers that are doing it tough at present.
However, while Ms Carnell welcomed this legislative move, the Australian chamber is calling for more widespread changes to the tax system.
"We applaud them for their action and hope that it will herald more substantial tax reform on issues including the GST rate and base, and stamp duty," she continued.
"As people increasingly head online to do their shopping the significance of this reform will grow. This is a further sign that we need our tax system to adapt to changing technologies and consumer habits."
Further tax changes
It is important to address further concerns of the chamber as well. In the past, tax reforms have been used by the federal government to introduce other taxes on businesses of all sizes. With this move set reduce the amount of GST revenue, the Australian Chamber explains all governments must work harder to reduce spending to make surpluses, not replace a tax with a tax.
For accounting and financial professionals, this type of legislative change is critical to stay across if seeking employment in the near future.
Ethos Corporation is an Australian-owned Executive Recruitment Consultancy specialising in the $120k - $400k candidate market.
By Andrew McPherson