GST extended to all goods bought overseas from July 2018

Gareth Hutchens
Parcels at an Amazon warehouse. Amazon has attacked the GST plan, calling it poorly designed. Photograph: James Grimstead/Rex Features

Australian consumers will have to pay a 10% goods and services tax on all online goods bought from overseas from 1 July next year.

The Turnbull government has secured support for the plan after Labor moved an amendment in the Senate on Monday delaying the plan’s start date from 1 July this year to 1 July next year.

It means imports of goods worth less than $1,000, which are now GST-free, will no longer be exempt from the tax.

Clothing, books, electronic devices and sports equipment, among other items bought online, will become relatively more expensive from July next year.

The legislation comes after years of heavy lobbying from local retail giants including Gerry Harvey.

Under the plan, the online giants eBay and Amazon may have to collect GST for the commonwealth on goods they sell to Australia – something they have fiercely argued against.

Labor’s amendment will require the Productivity Commission to investigate the most effective models available for collecting the GST on low-value online goods.

The commission will be asked to hold public hearings for the purposes of its inquiry, and must report to government by 31 October this year.

Labor says the inquiry will be vital, because Treasury officials have admitted the government’s plan has not been submitted to a regulatory impact statement and is in breach of the government’s best-practice requirements.

Australian Taxation Office officials have also conceded that the government’s plan will be difficult to police. They say consumers will have no way of knowing if GST charged on items they buy from overseas will ever return to Australia.

The government’s bill will have to go back to the House of Representatives for a final vote but is expected to pass easily with the government’s majority.

It comes almost two years after the former treasurer Joe Hockey announced the plan in August 2015.

According to the 2016-17 budget, the GST plan will raise $300m over four years, with the ATO to receive an extra $13.8m over four years to implement the measure.

In April ATO officials said they had compiled a list of 3,000 overseas companies that would need to register with Australia’s government to collect GST on the government’s behalf.

But they said the US and Chinese governments would be under no obligation to force companies operating within their borders to comply with the Australian government’s wishes.

Amazon has previously attacked the government’s plan, saying it is so poorly designed it will create an “inherent disincentive” to comply.

It has said the government should ask Australia Post to collect GST on goods imported to Australia but Australia Post has said that would render its parcels business “unviable”.