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.
I think what should be done is that services like Steam which are far more expensive than overseas be forced to sell at a reasonable price (eg Modern Warfare, currently sitting at $40 in Australia costs less than $20 in the US) but then pay GST, so they don’t just raise prices and cost even more.
I always found it kind of interesting that some digital services (Origin, Stan, iTunes) paid GST, whilst others (Steam, Google Play, Netflix) did not. I know its simply the latter groups creating structures to avoid paying tax, but still interesting from the PV of competition.
Don’t you love how these well paid politicians decide to hit the plebes again. They don’t care as they just give themselves a pay rise to cover it..
Unsure what Plebs have to do with digital purchases – if anything it’s the Middle Class and above that are the primary consumer.
Any and all citizenry classes, below the Ruling Classes, are plebs
The idea that Netflix is $1 cheaper than the local competition due to the GST seems unlikely to me. It’s cheaper because they wanted it to be cheaper.
Why should I pay GST when I buy ebooks from Google Ireland or when I pay a subscription to Netflix USA. These companies are under no obligation to collect GST no matter what laws Australia makes.
It’s the brilliant idea of the global finance ministers to hit google/apple/etc. – trying to say that the sale is where the customer is, not the vendor.
That applies across Europe already.
Thus, in theory, an Australian company selling an intangible good, is supposed to capture the VAT due for the country of the buyer, and register/pay that sum to the relevant country.
Which is significantly dumb and unworkable – but that’s their smart idea.
They are if they operate out of Australia. Google and Netflix has AU offices. Google used to collect GST on hardware, my N4 had GST in the bill but they didn’t remit this to AU they kept it for themselves. The N5 they didn’t charge GST. They may be billing via Ireland but it is Australia handling the sale so they are obliged to follow the law. Me I am tired of paying more and more tax whilst the wealthy get more and more tax concessions even though they don’t need it. What they do do however is donate to… Read more »
Do you work for Google or the ATO? Otherwise I don’t understand how you could know that Google is passing on the GST it collected for your N4.
I bought a N5 and a N9 and both came from Singapore – no GST there.
I know because I received my bill for the N4 from Singapore and it had GST on it, I noted specifically that the N5 did not when I bought it. I also contacted the ATO about the GST on the N4 and they started an investigation as they said specifically that no, no GST was payable on the item. Why else do you think that Google stopped charging GST with the purchase, because the ATO chased them down over it.
So they were not withholding GST from the government as there was none payable on the item. Righto. Sounds like a mistake with the receipt templates or something.
You’re aware that Singapore has its own GST right? That’s what you were probably paying if it came from there.
The wealthy as you call them are entitled to no more tax concessions than you or i are … They can claim the same percentage back as what you can. Those that like to throw absolute dollar values have no idea and honestly can move to the Today Tonight Bogan corner with the other whiners that don’t want to get out there and make something of themselves. . I’ve got no problem paying any tax add long as it covers everyone. The rich The poor anyone who uses the services. So long as the money goes back into services for… Read more »
You think you know it all. how smart you are. There are tax structures like family trusts and others which are technically available to all but the cost associated with them makes them not viable to others. So no it isn’t even for all and is part of the problem with the current taxation system.
I suspect you think you are someone special, the line about today tonight says you think you are so much better than the rest of us.
Whether GST applies to a transaction isn’t quite as simplistic as whether they have AU offices. Many multi-national companies have a presence in Australia, but that doesn’t necessarily mean the goods/services sold in Australia are subject to GST. Google buys ads in Australia from overseas, so they don’t remit GST to Australian advertisers, nor are advertisers liable to remit GST to the ATO, because they’re effectively exporting the service. The same thing happens with imports into Australia — Google sells products into Australia from overseas, and the Australian ‘arm’ of the business has nothing to do with the transaction.
Good luck with that. Unless the company is Australian or has an Australian business presence and you order from an Australian website they can’t enforce it. Buy from Google, Netflix etc etc that operates out of here yep do it, should have been done in the first place but ordering from a company in the US with no presence here at all that just ships to Australia especially a digital download, no chance impossible to do.