A report to the Australian government’s Goods and Services Tax (GST) distribution review has recommended online shoppers buying from overseas retailers should pay higher income taxes.
The taxes will compensate for GST revenues now lost to the government both because of the $1000 tax and duty exemption on imports, and because overseas retailers don’t pay Australian taxes.
Melbourne University tax specialist, Michael Evans, said in his report that taxpayers should be obliged to say in their tax returns if they’ve been shopping online at overseas retailers.
“This report proposes that compliance be achieved through collecting the tax as part of the consumer’s income tax return.”
Evans said that some states in America have similar requirements in their income tax returns and that around 1.6% of taxpayers comply.
But whilst the requirement to answer an overseas online shopping question would be mandatory in income tax returns, Evans said that compliance would effectively be voluntary.
“The inclusion of information in “TaxPack” and a dedicated field for mandatory completion would, it seems, promote voluntary compliance in an Australian environment.”
However Evans said that compliance could be encouraged by matching tax returns with data from Visa, Mastercard and other credit and debit card issuers.
“Even if the data from the card issuers was not absolutely ‘matching’ with the GST liabilities for tax payers, it would produce a starting point for a review of compliance.”
Evans report acknowledged that such a tax could be seen as a “tax on honesty” and would be both complex and costly.
The requirement that taxpayers self-assess their GST liability on their income tax return involves substantial complexity and costs (if just in the form of time lost).
Evens said that a preferred option for the government to collect GST from overseas retailers would be to amend Australia’s tax laws to make them liable.
He said companies such as Amazon are believed to pay some domestic taxes levied by governments in countries where their sales are legally liable for tax.
Evans said that his report was commissioned for the GST Distribution Review panel by the Treasury department.
The three-man GST Distribution Review Panel, comprising Nick Greiner, John Brumby and SA businessman, Bruce Carter, released its interim report yesterday.
Their interim report said that Evans paper, and its recommendations, had been passed on to the Low Value Parcel Processing Taskforce set up by the government late last year to look at the $1000 exemption on online shopping imports.
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