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 SmartCompany's senior journalist.

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  • Ed Shyed

    still cant see it being enforced, businesses in other countries will just tell our govt to get stuffed, and rightly so, as they are not bound by OUR laws, so whats their option, banning them? and how then does the govt with no legal authority over them intend to stop that businesses selling here, again, it cant, unless it cries to ASIC and they blanket ban another 2000 domains because they have NFI about technology, again.

    The bigger problem, or the root cause, is why does the same item cost 3 times as more here than overseas, THAT is the root cause of why people shop internationally, yes, high import taxes and labor rates, both among highest in world doesn’t help, but neither does profiteering.

    The end result is, an item in China (that is of equal quality), should be cheaper for us to buy here, an Item in Germany should also be cheaper to buy here, but the fact is they are cheaper to buy overseas with postal fees, often by a substantial amount.

    Finally, delivery charges are also a serious fault in this country, Australia Post are guilty at ripping people off, it is more often than not, with local sales, CHEAPER to get a freaking taxi to deliver it for me, than to use AP or their courier equivalent STE.

    Lets fix the root cause hey, rather than try blame on the internationals, its not their fault they can sell an item, make a nice profit, post it to us here in Oz, at a substantially less cost to us, than buying the same item in a local store.

    • Rohan Baker

      Yep, I purchase electrical components online. Some transactions are $1.40 including delivery (for say 50 resistors). How much is it going to cost to collect that $0.14 in gst?

      We are being governed by imbeciles.

  • haydn

    Some companies are already collecting the GST. TomTom is a classic example.
    The biggest issue I have is when purchasing from an overseas country is that their own VAT or GST is already built into the purchase price and then we’re slugged for GST at this end. A real case of Governmental double-dipping. In theory, it’s possible to get the VAT or GST deducted by the seller but the bureaucratic hassles of doing so mean most foreign retailers won’t do it – even for big ticket items.
    If the Post Office were to collect the GST at this end, then I’d want to know the item is intact. We’ve had 3 deliveries of late and 2 had broken items in them because of rough handling. I’m not prepared to pay GST on damaged goods. If the retailer at the other end collects it, then I’d also want to ensure I got the goods. Too many items “disappear” in the mail here and are virtually unclaimable if they’re not sent registered (and we’ve had registered items go missing between here and NZ and still not able to make a claim).

  • Australia is once again shooting itself in the foot, GST on a 25 million strong market – we are small fry, we represent a tiny fraction of the global market – GST is rubbish

  • Garry Robinson

    What puzzles me is how someone from China can post me a plastic cup for nothing and Australia Post delivers the cup at the end. If Australian store posts the same cup in Australia, Australia Post charges 7 bucks. This cup costs 5 bucks in both countries, its the free delivery that gets me. Hopefully Australia Post gets some money from the Chinese subsidisers.

    • narrismo

      1. The global rules of the postal service is that the start point of the package gets the money for the ship, and the carriers along the way get nothing. So low or no cost Chinese shipping is offset by high cost Australian domestic shipping as it passes on the cost through higher package prices here.
      2. China subsidises its postal costs.

  • narrismo

    As a helpful person, I’d just like to help Morrison and Gallagher out on this one. They should ask VENDORS to collect the GST.

    Why? Because on June 29, 2018, both Amazon Australia, and eBay Australia, should sell their Australian arms into holding companies into the Carribean, or other suitable tax avoidance jurisdictions. Then they should tell Canberra to GFI.

    And what if Amazon Australia gets its assets seized? Probably small fry compared to how many sales they’ll miss out on their major site. And what exactly can Australia seize of eBay Australia…an office? I mean, if their HQ is in the Caymans, what exactly will Australia do? block their domain the way Australia bullies pirate websites? Ha! Then eBay Australia can refuse to pay ANY taxes to Australia, as a protest for this silly law. (ditto Amazon on their kindle website)

    And if this doesn’t work, I’d like to all introduce you to my new AusShip company based out of every major Western Country you’d like to ship from. We comply with all DOMESTIC laws, but because Australia is international, can’t help. AusShip will re-direct all your packages without silly GST! And if we get closed down by the Australian Government suiing us? Oh, that’s right, now we’re AuzShip. We could also be AosShip, AuzzShip, OzzzzShip. Try to keep shutting down companies in the US, it’s always fun. What about the directors you could say? I think they were last seen in the Cayman Islands. Because that’s where the money goes after paying domestic taxes.

    These foreign companies should just go Uber on the Australian government. Laugh in their face.

  • Tan

    I will still keep buying from overseas although it’s 10% more expensive than before as it’s still at least 30-40% cheaper than buying it locally . There is no such thing as level playing field as the height cost Australia will always be more expensive than the low cost China or overseas .