Australian Treasurer Joe Hockey has told Radio National on Monday morning that the government will be collecting the GST from overseas online retailers directly under changes proposed to lower the online GST threshold.
"What we've identified is a way ... to be able to impose the GST on the supplier overseas -- other countries have passed those laws as well -- so now we can go to the Amazons, we can go to the various retailers overseas and say, 'You have to apply the GST to goods that you are selling into the Australian market', and they will do so," he said.
"That's how we are going to collect it."
Australia currently collects GST on overseas online purchases worth more than AU$1,000, although lowering the threshold has been debated for years.
The former Labor federal government conducted a GST review in 2012, with the report recommending that the GST threshold for online purchases be lowered from AU$1,000 to AU$500. At the time, Assistant Treasurer David Bradbury said the cost to taxpayers of collecting GST on low-value parcels would outstrip the revenue gained as a result.
"With around 58 million parcels entering Australia under the low-value import threshold each year, lowering the threshold before putting in place significant reforms to processing capabilities would cause major disruptions to the international mail service and result in major inconvenience to the businesses and consumers that rely upon it," Bradbury said at the time.
Now, though, Hockey believes that his method to collect online GST will avoid the logistical nightmare of checking parcels, and would allow the online GST threshold to be lowered to zero.
"It may well go to zero," he said. "We are currently discussing the matter. It is something that the states' treasurers and I have been working on for more than 12 months."
In April, Treasury deputy secretary Rob Heferen told a Senate inquiry that compliance costs would be very low if international providers of imported goods had to register and simply pay the GST.
"Australia wouldn't need the agreement of any country to do this. The federal government would need the agreement of the states and territories," said Heferen.
Speaking earlier this morning, Communications Minister Malcolm Turnbull said GST should be collected when Australians or Australian-based companies purchase items from overseas companies such as Facebook or Google.
"We've seen this with the online platforms where they've been asked to collect differentiated tax rates," he said. "Go onto Amazon and order something, put in an address in New York and you'll get one set of taxes, change it to an address to another state and you'll see another set of taxes."
"They've got the systems to collect it and we should be getting it."
Update: Added comments from Turnbull.