Online GST inquiry kicks off

The Productivity Commission has begun its "Economic Structure and Performance" inquiry into online retailing, which will look into whether to change the taxation rules for online purchases from offshore sites.

The Productivity Commission has begun its "Economic Structure and Performance" inquiry into online retailing, which will look into whether to change the taxation rules for online purchases from offshore sites.

Cash register

(Uncle Sam's savings image by
Keith Ramsey, CC BY-SA 2.0)

The government first announced the inquiry in December last year as a response to growing resentment from Harvey Norman founder Gerry Harvey and a number of bricks-and-mortar retailers over the fact that goods under $1000 purchased online from stores overseas don't attract GST.

The inquiry is being headed up by former Orica CEO and managing director Philip Weickhardt as well as former Australian Consumers' Association CEO Louise Sylvan. The terms of reference for the inquiry, announced by Assistant Treasurer Bill Shorten earlier this month, state that the inquiry will examine the impact of globalisation, increases in online purchasing by Australian consumers, as well as the current tax arrangements of imported goods and the effect it is having on the Australian retail industry.

The commission will also look at what technology could be used to reduce the administrative costs of collecting taxes on imported goods. Shorten has previously stated that ensuring every imported good was subject to the GST would be too costly for the government to administer.

In a circular produced late last week, the commission announced it intends to release an issues paper on the inquiry by the end of next month, and will accept submissions from the public until 20 May. A draft report will be produced by August, with public hearings set for September before a final report is handed to the government in November.

The announcement was welcomed by the Australian Retailers Association group Fair Imports Alliance.

"The Fair Imports Alliance also looks forward to some more constructive consultation regarding the customs compliance campaign, which should shed light on businesses and individuals misusing the current GST-free threshold for imported goods," Alliance spokesperson Russell Zimmerman said in a statement.

The Department of Broadband Communications and the Digital Economy is holding an online retail forum this Friday in Sydney. Communications Minister Stephen Conroy, Small Business Minister Nick Sherry and a number of retailers have been confirmed to speak at the event.

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