Next week’s Australian Federal Budget could include what’s being described as a ‘Netflix Tax’, which would impose GST on digital goods and services purchased online which have, to date, been exempt from the tax.
According to the Sydney Morning Herald, Assistant Treasurer Josh Frydenberg is behind the push to impose the GST on digital purchases. This proposed tax, if tabled in next weeks budget, would see increases to the cost of non-tangible digital goods purchased online such as books, music, software and videos.
It’s worth noting, though, that Google Play does levy GST on some purchases, where the seller is Australian based. For example, purchases of Shifty Jelly apps attracts GST, but this appears to be inconsistent. Some other Australian developers do not attract GST on their apps. In all likelihood, if the GST is made to apply to digital purchases, all Google Play purchases in Australia will have a 10% charge added for GST.
This tax would also affect video streaming service Netflix which has just arrived in Australia, making the service 10% more expensive. It’s worth noting that Netflix enjoys an advantage over local streaming services at the moment such as Presto, Stan and QuickFlix, because it doesn’t have to charge GST on its services.
The proposed tax, if levied, would increase the cost of Netflix from $8.99 a month to $9.89 for the basic package, or $13.19 for the standard package. It’s not a significant increase in cost for users, though some will undoubtedly feel aggrieved, but it will be a fairly large tax windfall for the government if the proposed tax makes it into next weeks budget.
The SMH has referenced a report by former premiers Nick Greiner and John Brumby from 2012, which reportedly showed that more than $1 billion a year could be gained in tax revenue if overseas goods and services were subjected to GST, a figure that could be higher with trends in software downloads increasing in the last three years since the report was written.
Apparently there’s also plans to extend the imposition of GST onto other purchases too, with Mr Frydenberg also looking to extend this to small overseas orders under $1000 which are currently excluded from the tax.
The Federal Budget will be tabled next week in Parliament where, if included, all these details will be made public. We’ll be watching with keen interest.
We’re already charged more for goods and services in Australia than they’re sold for overseas, and that’s before you factor in taxes. Having to pay GST on these goods and services as well will only serve to increase the cost of technology for Australians, and that’s a bad thing in an already expensive market.
Editorial by Chris Rowland, original report from Dan Tyson.