Tax

Why Australia Post is going head-to-head with Amazon over GST collection

Emma Koehn /

The goods and services tax will apply to low value goods purchased online overseas vendors from next year, but Australia Post is still fighting it out with the world’s biggest online retailers over exactly whose responsibility it will be to collect the cash from July 1, 2018.

After years of consultation, the Senate passed legislation to scrap the $1,000 GST-free threshold for overseas purchases in June, but plenty of questions were still on the table at the time as to how that would work in practice.

The central point of conflict is around whether third party retail platforms and marketplaces, like Etsy, Amazon and Alibaba, should play a role in collecting the tax from their vendors, or whether it should be the responsibility of the logistics businesses delivering parcels to consumers, including Australia Post.

Treasurer Scott Morrison referred these issues to the Productivity Commission in June, and submissions from logistics businesses and retailers on the issue reveal fiery differences in opinion on the way forward.

The Productivity Commission is slated to deliver a report to the federal government on the collection of the GST at the end of October.

The retailer’s perspective

In recent submissions to the Productivity Commission, Amazon, Etsy, Alibaba and eBay remain sceptical about how effectively the GST can be collected from overseas sellers on their platforms, and all propose a “border collection” or “transporter” model where the actual tax collection occurs through the parties that deliver goods, rather than the platforms that facilitate the sale.

The big players prefer this model to the “vendor collection model” that has been proposed by the government, and which would involve sellers with a turnover of $75,000 or more having to register for collection of the tax individually.

Amazon said in a submission to the Commission at the end of August that the “vendor collection model” would involve “offshore enforcement of Australian laws against each of these businesses” if they didn’t comply, and there would be few available consequences if vendors didn’t register.

Amazon has outlined an alternative transporter model, which it says Australia Post will be able to develop “over time” to ensure the most effective collection of the tax. The global retail giant argues that because Australia Post is committed to implementing new electronic processing techniques, it “either has now, or will in the near future, have the necessary data available to enable it to collect and remit the GST”.

Australia Post’s concern

However, a submission from Australia Post rebuts the suggestion that it would be possible or sensible for the post service to effectively collect the tax.

It supports the vendor collection model, and argues that because sales platforms like Amazon have the closest relationship to the actual transaction of the goods, the burden of collection should lie with vendors on those platforms.

Australia Post says that while advanced electronic processes are on the horizon, the organisation is not set up to run these immediately. The mail carrier says while changes to electronic barcoding will be set up by early next year, indications are that Australia’s key trading partners won’t be set up in their respective countries to use these when sending parcels into Australia by next year.

It has rejected the collection model suggested by Amazon in August, which would see it and cargo operators leverage electronic data to process the tax, because “it fails to recognise the existing relation between the overseas vendor or offshore marketplace provider and the acquirer of the goods subject to the importation, and fails to leverage fully the existing payment systems which should be able to be modified to accommodate the collection of the GST”.

The small business view

Local online businesses have previously told SmartCompany the scrapping of the low-value threshold will ultimately level the playing field for Australian businesses that have been competing for years against global retailers that have not had to apply the GST.

Owner of Sydney’s Pages & Pages Booksellers Jon Page says the change will allow small Aussie businesses to better compete with global rivals, but it is frustrating to see the likes of Amazon wanting to handball collection responsibilities to Australia Post.

“I think it’s completely reasonable that Amazon collects it themselves — there’s no reason they can’t do it,” Page says.

The GST issue has been debated for years all while smaller retailers have continued to battle competitors that are able to offer lower prices, and Page says whatever the final decision is on collection of the tax, shoppers should understand that shopping online overseas comes with costs.

“Consumers have to be aware that the cheapest price often comes at a cost,” he says.

SmartCompany has contacted Australia Post for further comment.

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Emma Koehn

Emma Koehn is a former senior SmartCompany journalist.

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