International online retailers are instructing buyers to take advantage of the GST-free threshold by offering false invoices in a practice which is becoming increasingly widespread.
Hong Kong electronics retailer eGlobal is offering to “prepare and adjusted invoice upon customer’s request”, so that goods appear to cost less than the $1,000 tax free limit, according to The Australian.
An eGlobal customer service representative offered to falsify the invoice for a $1,900 camera – saving about $300 in GST and custom imports – on the basis that the package was unlikely to be intercepted by Australian customs.
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Access to eGlobal’s website was down this morning and SmartCompany was unable to contact the company for comment prior to publication.
Russell Zimmerman, executive director of the Australian Retailers Association, told SmartCompany the practice was widespread and that the association has lobbied the government about it.
“I am extremely aware of that happening. We have spoken to government about it; I was in Canberra on Monday last week and we took it up with a number of ministers,” says Zimmerman.
“We know it is particularly happening out of China – goods are being sent into the country and coming in under the threshold on the invoice, but worth a lot more.
“I think it is far more widespread than what the government is aware of.”
Zimmerman says he was recently made aware of an Australian consumer who ordered a rug from Europe worth more than $2,000 off the internet.
The consumer expected to have to pay taxes and duties on the product and had not requested the use of a false price, but when it arrived the parcel said “goods of sample quality of $90”.
Zimmerman says the ARA wants to ensure the practice of falsifying invoices and evading GST does not continue.
“We are working closely with government and the task force and we are hoping that this will be captured and there will be a far more vigilant assessment done on these goods,” says Zimmerman.
“The states are losing out on $650 million worth of tax that is not being collected on what we currently know is coming through on a threshold set at $1000. How much more is being lost because various goods are being brought in which are undervalued?”
Zimmerman was unable to estimate how much the invoice scam was costing in lost GST or in cost to Australian retailers.
“I don’t think anyone really knows or understands or the government knows or understands,” he says.