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(Australian Associated Press)
Whacking cheap imported goods with GST was meant to give local businesses a fairer crack at online shoppers, and a review will check whether it’s working.
The tax office began raking in more than $350 million a year when low value imported goods lost their GST-free status in 2018, exceeding expectations.
More than 1000 vendors are complying with the regime, including the biggest players Amazon and eBay.
“We are confident that the major suppliers, including platforms, with obligations under the law are registered,” the ATO told AAP.
But Fady Abi Abdallah from audit and accounting firm BDO Australia is concerned many suppliers are still unaware of their Australian goods and services tax obligations.
“Some confusion still remains, particularly in relation to re-deliverers (people onselling goods) and supplies made through electronic distribution platforms,” he told AAP.
The pandemic will also complicate the review, not just for those wanting to have their say.
Elinor Kasapidis, a senior manager of tax policy at CPA Australia, said COVID-19 had increased people’s online shopping activities including purchases from overseas.
“There may be growing challenges in identifying smaller sellers located overseas that may not be aware of their obligations,” she told AAP.
Despite disruptions during the pandemic, the ATO said there had been no notable fluctuations in GST revenue under the regime.
Available figures cover its first two years of operations, rising from a bigger than expected $357 million in 2018/19 to $385 million in 2019/20.
Top federal bureaucrats have been asked by Assistant Treasurer Michael Sukkar to conduct the review.
Before the changes, goods costing $1000 or less that were imported by online shoppers did not attract GST, which meant foreign retailers had an advantage.
Consumers buying offshore now face the same tax regime as goods that are sourced locally, which should increase the incentive to buy local.
When a vendor has a turnover of $75,000 or more, it must register and collect GST to be paid to the Australian Tax Office.
The tax office can match financial information and may make random purchases to test for dodgy practices.
BDO Australia has noticed an increased level of compliance among international suppliers and more activity by the ATO, with targeted notices alerting them to their tax obligations.
CPA Australia said the decision to apply GST on low value imports, rather than a direct tax on digital services, has been mirrored by other countries and expects the regime to continue.
But they are now getting reports of changes to the import regime in the United Kingdom making it unprofitable for Australian businesses to sell to UK-based shoppers, Ms Kasapidis said.
The ATO also monitors for front companies claiming to be local who may actually be registered in other countries such as China.
The tax board is expected to report back by mid-December.