State and territory treasurers have agreed to introduce the GST on products and services purchased online by Australians from overseas and brought into the country, Treasurer Joe Hockey said on Friday.
The change, which will lower the threshold for GST collection from online goods from its current AU$1,000 level to zero, is set take effect from July 1, 2017, but Hockey said that if it is possible to bring the change in earlier, then he would like to do so.
Hockey said that further work is needed to calculate the amount of revenue raised as a result of the change.
The tax office is set to target companies selling more than AU$75,000 of goods and services in value into the country, and asking them to register for GST collection. The treasurer said the number of companies targeted could be in the hundreds.
"In relation to digital products, it's easy to identify a number of those companies -- such as Netflix, or Facebook, or others. In relation to goods, there could be a very large number; however, what we are able to do is narrow down the number of high-volume goods vendors into Australia," he said.
"There is now a growing global consensus where the vendors of goods and services overseas will willingly apply consumption taxes to their goods and services sold into a particular jurisdiction."
Collecting GST on imported goods has long been debated since internet shopping grew in prominence, but has repeatedly been seen as not cost effective.
"One of the impediments to delivering on this integrity measure in the past has been the enforceability of it, and that is because previously, there were proposals that each parcel that comes into the country should be inspected and determined whether that was less than a certain value -- quite frankly, that was ridiculous," Hockey said.
Hockey said the low-value threshold had impacted Australian jobs and businesses, and it was unfair that local businesses had to collect the GST while companies overseas were offering similar services at a lower price thanks to not collecting the tax.
"There's many levers we have to be able to apply some pressure to these [overseas] companies. The Australian government is leading the world in many of these areas," he said.
As well making changes to the GST, the government is examining ways to collect company tax from multinationals doing business in Australia. Earlier this week, documents revealed AU$31 billion made in Australia in one year was shuffled through Singapore by 10 major companies.
A draft report from the Senate standing committee on economics released on Tuesday called for the naming and shaming of companies involved in tax avoidance.
"[The committee] was also taken aback by the reluctance of some companies to disclose information to the committee, or, of greater concern, where some companies seemed not to be in possession of what seemed important information about their company's operations in other countries," the report said.
"The committee, however, is dismayed by the ingenuity shown by some companies in avoiding answering questions posed by the committee. This reluctance verged on contempt for the committee process, exhibited disdain for Australian taxpayers, and overall reflected poorly on those particular companies."
One of the recommendations called on the federal government to make companies state in which location they reside for tax purposes when tendering and competing for government contracts.