Levelling the playing field with online marketplaces via GST
As new marketplaces and systems emerge taxation systems react and adapt. Recent changes to GST for online marketplaces have been widely favoured with politics put aside. Generally the system will use a taxation means that is labelled regressive, and apply it to a niche area only it can occupy with paying 'where consumed' so to say for online goods and services.
Previously various tax evasion strategies could be employed by foreign companies to avoid paying tax when selling via an online marketplace. For example the business could be registered in a lower taxation area with the server based there as the excuse for operations.
The tax will apply to 'low value goods'. These are physical goods, excluding tobacco and alcohol which already have a system in place, where they are valued at $1,000 or less. Transport and insurance costs are excluded when determining if the GST will apply to the goods sold. GST will be the standard 10% on goods and services. It is easy maths it is 1/11th of what the consumer pays :)
The collection of GST will be the responsibility of the electronic distribution platform (EDP). An EDP is considered
"-a service which allows you to make sales of low value goods available to consumers, and
-the service is delivered through electronic communication (such as a website, online marketplace or an app)."
Naturally this tax will not apply for businesses not registered for GST (businesses operating under the threshold of turnover).
It is not considered to be an EDP if the platform only advertises and or links to a website. The GST on this element will be the responsibility of the selling business.
Major EDPs include Amazon and Ebay who had previously been able to undercut local retailers and alike by avoiding taxation. As has been major news Amazon, the largest company in the world, has been upset at the idea of paying tax like regular Australian businesses and has cut off sections of its trading platform to Australia, placing blame elsewhere.
This use of GST holds potential to capture more international taxation via varied expansion in the future around advertising as well which will undoubtably upset Facebook and Google.