A year ago (on 1 July 2018) the Australian Taxation Office introduced legislation regarding GST on low value goods imported from overseas, specifically to target consumer online internet shopping, in an attempt to ‘level the playing field’ between overseas suppliers and our local retailers.
The legislation requires overseas businesses to charge Australian GST on their sales of low value goods to consumers in Australia. Over 1,000 overseas businesses have registered for GST, which includes all the known major suppliers and international platforms.
As at 1 May 2019, the ATO has now collected over $250 million in GST for the first nine months of the low value goods measure, outstripping forecasts by $180 million. The measure resulted in $81 million of GST being raised in the first quarter alone, which surpassed the $70 million projected for the full year.
Let’s think about those numbers for a minute.
$250 million in GST equals $2.75 billion in sales of low value goods being imported from overseas. That’s a lot of leakage from our Australian retailers, and that was for 9 months, if we extrapolate that number for a full year its $3.66 billion. Also keep in mind this is only collected from overseas businesses that were forced to register for GST – there are many small independent operators who do not need to register and therefore, their sales are not included in these calculations.
Safe to say, there has been an explosion of ecommerce in Australia over the last 5 years. A recent report by NAB revealed that “in 2017 online shopping increased by 10% while foot traffic increased by just 3%”.
If you are a traditional bricks and mortar Australian retailer, these dollars and statistics are alarming, and rather than curl up in the corner and admit defeat, it’s more important than ever to add an online store to your retail operations, and to get creative to compete with online retailers.
The professional business advisors at UHY Haines Norton Gladstone are always here to help business owners grow and prosper. Call us today on 4972 1300 to discuss your challenges in business.