All overseas parcels could attract a new $5 tax under government plan: Will it help local retailers?


The Department of Home Affairs is reportedly considering placing a $5 tax on every low-value parcel that comes into Australia, but one independent Australian e-commerce founder says he’ll believe it when he sees it.

Fairfax reports it has seen a discussion paper from the department about the idea, which would aim to address the bio-security costs associated with the influx of low-value parcels from abroad that have emerged over the past few years as Australians embraced online shopping.

“This has created increasing inequity and cross-subsidisation, where importers of high value consignments are paying for the border activities attributable to other users,” the discussion paper said, according to Fairfax.

The policy idea would involve a flat $5 fee being placed on all parcels worth less than $1000, capturing items like beauty items and clothing. The fees would then cover the cost of necessary bio-security screenings for goods coming into Australia.

The Department of Home Affairs has not confirmed the policy is on the table, and did not respond to requests for comment from SmartCompany prior to publication.

The suggestion of the fee comes as the government continues consultation on which party will soon be responsible for collecting the GST on low-value parcels from overseas. 

The federal parliament passed legislation last year that means online purchases sent from overseas worth $1000 or less will incur a GST liability from July 1 this year. After years of debate on the policy, the conversation has turned to how, exactly, it will be implemented, with Australia Post and big retailers both arguing that the other party should be responsible for collection of the tax.

Founder of local e-commerce business Yellow Octopus, Derek Sheen, says the idea of taxing overseas parcels would be appealing to local retailers because it could encourage more Australians to buy online from local providers to avoid being slugged extra fees.

“For us, because we are shipping locally, this would be great. It would reduce that competition from overseas,” Sheen says.

However, he isn’t holding his breath that such a plan would ever eventuate, given the challenges with collecting a levy as small as $5 a parcel.

“It’s going to be so costly to collect all that money — so to be perfectly honest, I don’t think it would every come into existence,” he says.

Sheen has watched the discussion about whether the GST should be applied to low-value online purchases from overseas vendors for years, and says the snail’s pace of progress for that policy indicates it’s hard to change anything in the parcel delivery space.

“They’ve spoken for so, so long, about the GST on those small values,” he says.

With that policy finally being legislated, Sheen says the most important thing is that the government actually gets it up and running by making a call on who will collect the tax from July.

“The taxing of all parcels coming in [to Australia] with the GST, that’s really what would be great for us — it will level the playing field,” he says.

NOW READ: Local retailers will soon feel the force of Amazon’s aggressive price-drop strategy

You can help us (and help yourself)

Small and medium businesses and startups have never needed credible, independent journalism and information more than now.

That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.

Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.

Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.