Antipodean Modellers and Looming tax changes

[sandwich station]

But books purchased in Australia are not GST free.

Yes I know that?

[Andy Mac]

Well, it seems to me that if our President can make Mexico pay for a wall built by Americans on American soil as directed by the American President, then collecting 10 percent on purchases from Hattons should be easy right?  (Ducking now so I don't get hit by a flying object). 

 

Who let someone from the North American colonies in here? Lol....

[davefromacrossthepond]

Who let someone from the North American colonies in here? Lol....

 

Perhaps y'all need a wall too. 

 

In all seriousness . . . I've enjoyed myself immensely since joining RMweb and have learned a bunch about both the railways in Britain and the ways they are modeled.  Thanks for letting me in.

[dpgibbons]

No GST added to my Hattons order yesterday.

[Johnfromoz]

No GST added to my Hattons order yesterday.

Yeah have tested them a few times since 1 July and no GST and no sign of their previous stated intention to charge.

[PatB]

Yeah have tested them a few times since 1 July and no GST and no sign of their previous stated intention to charge.

 

But have you received any of your purchases yet without having to ransom them from Australia Post?

[Johnfromoz]

But have you received any of your purchases yet without having to ransom them from Australia Post?

Yes received all so far (3). Below $1000 ATO/Border will not levy at point of delivery

[Andy Mac]

Perhaps there might be a grace period in place to allow for orders placed before 1 st July to be delivered...

 

Would be interesting to know who gets the first card from Australia post to go and pay the gst...

[monkeysarefun]

Would be interesting to know who gets the first card from Australia post to go and pay the gst...

 

 

That isn't how it is going to work - the government isn't making any effort to collect the GST other than to threaten overseas companies:

 

"The Tax Office has ordered online stores to collect GST on their customers' behalf. There is no mechanism by which shoppers are able to contribute 10 per cent of their purchase independently.

 

A spokesman warned businesses that chose not to comply could face 75 per cent penalties on top of unpaid GST, Australian payments being garnished out of their accounts and debt recovery action in foreign courts.

 

"The ATO cannot publicise action taken in individual cases due to privacy laws [but] businesses that do the right thing can be assured that we will, where appropriate, pursue businesses that don’t do the right thing," he said.

 

A spokeswoman for Treasurer Scott Morrison said offenders could face 12 months imprisonment."

 

And if you DO get hit with a GST charge on something you bought, it could be that you are just unlucky,  given that:

 

"As of 10 July, 721 offshore businesses registered for low value imported goods."

Edited July 14, 2018 by monkeysarefun

[34theletterbetweenB&D]

...A spokesman warned businesses that chose not to comply could face 75 per cent penalties on top of unpaid GST, Australian payments being garnished out of their accounts and debt recovery action in foreign courts...

 That is a pure fiction as relating to any business that has no presence in Australia, and any attempt to bring legal action in foreign courts is unlikely to be heard. (The legal profession in some countries may be keen on the idea of course, it is a revenue opportunity; the Australian government will be paying a fee for their services whatever the outcome.)

[PatB]

I remain deeply sceptical of the ATO having any meaningful jurisdiction over companies operating outside Australia. Please note the "where appropriate" get-out clause in the ATO spokesperson's statement.

[jukebox]

I remain deeply sceptical of the ATO having any meaningful jurisdiction over companies operating outside Australia. Please note the "where appropriate" get-out clause in the ATO spokesperson's statement.

 

I remain deeply sceptical of the ATO, period.

[Craigw]

I did two purchases via Ebay last night - a book and a secondhand model.

 

Both had GST levied on the final price - including postage.

 

Regards,

 

Craig w

[Quarryscapes]

Well there we go then, if they aren't going to bother levying at the border, then there's no point to a non Oz based business registering. I can't see them making a register of the sender of every parcel that passes through the border  to check up on them. 

 

Just out of interest, can anyone who has sold on ebay to Australia comment hon how that worked out? Buyers are obviously paying the GST, but what does the seller see at their end? 

[Gwiwer]

I suspect the issue is that that there is no mechanism to enforce GST collection by those businesses which have no presence in Australia.  Th corollary of which is that collection could be enforced through those, such as EBay, which do.

 

That is not to say there is actually a mechanism to do this nor that anyone has any idea how it is supposed to work.  But eBay (as the example) is a multinational business meaning that even if an Australian buys from the UK or US sites they may find GST applied by default as the business has it's .com.au side based in Oz.

 

Hattons et al have no commercial presence in Australia and (again using Hattons as the example) are governed by UK law.  There is no treaty under which Australia can do anything to collect taxes they impose via a UK business.  Let them try and let them see how much it costs to remove egg from their faces.

 

My thinking?  All of this will roll over and die soon enough except for the likes of EBay transactions.  Fair and equitable?  No - probably not.  Since when has taxation ever been fair and equitable?

[jjb1970]

Has Australia thought this through and considered that this could become a case of be careful what you wish for? It isn't difficult to imagine scenarios where certain countries might be quite happy to enter into a reciprocal agreement whereby their own laws are enforceable in Australia.

[PatB]

Has Australia thought this through ......

 

Surely you jest?

 

But some unfortunate mid-level public servant will no longer have Gerry Harvey and Gerry's mate, the Minister, breathing down their neck, at least for a while, so somebody's had a win.

[Johnfromoz]

Perhaps there might be a grace period in place to allow for orders placed before 1 st July to be delivered...

Would be interesting to know who gets the first card from Australia post to go and pay the gst...

As mentioned earlier, my purchases were all well after 1 July. Hattons seem to have put their plans in abeyance, either because their software was not ready or because they no longer feel the need to comply, or other reasons unknown to us.

[monkeysarefun]

From the Guardian June 2017:

 

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.

 

From the ATO website, presumably this is the information that they would have disseminated to the above 3000 plus whatever other businesses they had managed to make aware of the changes since then:

 

 

We will take action against businesses who do not meet their GST obligations.

Our expectations of you

We expect that you will:

• comply with your obligations under the law
• contact us as soon as possible if you have difficulty in complying.

What you can expect of us

We will:

• treat you fairly, reasonably and consistently
• consider your circumstances
• work with you to find solutions to issues you are having.

Businesses that do the right thing

Businesses that do the right thing should not be commercially disadvantaged by their competitors who choose not to comply.

We take action against businesses that do not meet their Australian GST obligations so that those that do the right thing are not disadvantaged.

Businesses that try to do the right thing

We’re here to support you, however we expect you to take reasonable steps to comply. If you still find that you are having difficulty complying, contact us and we will work with you to help you.

Businesses that don't do the right thing

Serious consequences, such as interest, penalties and potential prosecution can apply if you:

• deliberately fail to register for GST when you need to
• intentionally fail to report, or consistently under-report, your tax obligations
• conspire with others to evade or avoid tax obligations
• intentionally do not meet your tax obligations.

Consequences for non-compliance

The compliance treatments we use vary according to the type of behaviour you exhibit. We group business behaviours into categories and apply an appropriate approach to each of those categories.

If you choose not to comply with the law, the Commissioner of Taxation can take actions including:

• registering you for GST
• imposing an additional 75% administrative penalty, which then becomes legally payable
• intercepting funds from Australia that are destined for you
• registering the debt in a court in your country
• requesting the taxation authority in your country to recover the debt on our behalf.

---------------------------------------------------------------------------------------------------------------------------------------------------------------

 

Consequently, the number of overseas businesses that have subsequently decided to register:  721.

The bit above that I mede red is  interesting/potentially concerning...

• intercepting funds from Australia that are destined for you
•  

So in theory someone here in Australia  in good faith could send a large payment to say Hattons for an order  only to have that money confiscated by the government to help  pay off Hattons GST debt???

Edited July 16, 2018 by monkeysarefun

[frobisher]

If you want to read up on the subject, here's the ATO's own list of tax treaties.

 

https://treasury.gov.au/tax-treaties/

 

And this external link...

 

https://read.oecd-ilibrary.org/taxation/the-multilateral-convention-on-mutual-administrative-assistance-in-tax-matters_9789264115606-en#page1

 

I think relates to the convention that the ATO are pinning their hopes on. Whilst IANAL ("I Am Not A Lawyer" for those who do not know the acronym and want to snigger...) my quick reading of that is they are a hiding to nothing unless there is a separate treaty in place with the countries in question that covers the tax (whatever it may be) in question and it specifically doesn't cover import tariffs. Scouring the first list, there's nothing between the UK and Australia to enable this...

 

This being it in regards the UK and Australia

 

https://www.gov.uk/government/publications/australia-tax-treaties

 

GST collection is certainly NOT covered by this for organisations that do not have a base in Australia

[St Enodoc]

Has Australia thought this through and considered that this could become a case of be careful what you wish for? It isn't difficult to imagine scenarios where certain countries might be quite happy to enter into a reciprocal agreement whereby their own laws are enforceable in Australia.

 

I suspect the issue is that that there is no mechanism to enforce GST collection by those businesses which have no presence in Australia.  Th corollary of which is that collection could be enforced through those, such as EBay, which do.

 

That is not to say there is actually a mechanism to do this nor that anyone has any idea how it is supposed to work.  But eBay (as the example) is a multinational business meaning that even if an Australian buys from the UK or US sites they may find GST applied by default as the business has it's .com.au side based in Oz.

 

Hattons et al have no commercial presence in Australia and (again using Hattons as the example) are governed by UK law.  There is no treaty under which Australia can do anything to collect taxes they impose via a UK business.  Let them try and let them see how much it costs to remove egg from their faces.

 

My thinking?  All of this will roll over and die soon enough except for the likes of EBay transactions.  Fair and equitable?  No - probably not.  Since when has taxation ever been fair and equitable?

I hope you are right Rick. My concern, as expressed earlier in this topic, is that suppliers will get fed up with the hassle and simply stop supplying to Australia. That would be a bad outcome both for us and for the ATO.

[monkeysarefun]

My thinking?  All of this will roll over and die soon enough except for the likes of EBay transactions.  Fair and equitable?  No - probably not.  Since when has taxation ever been fair and equitable?

 

Gerry Harvey was constantly on the  Govts back about a GST on overseas goods. The government can now say they have done this. The fact that it is such a sloppy implementation probably doesn't concern them I guess -  they have just wanted to be able to tick the 'done' box.

 

And I can still get memory cards cheaper from overseas via Ebay  than I can from Harvey Norman, even with the GST on the item AND the postage.

Edited July 16, 2018 by monkeysarefun

[34theletterbetweenB&D]

...intercepting funds from Australia that are destined for you

 

So in theory someone here in Australia  in good faith could send a large payment to say Hattons for an order  only to have that money confiscated by the government to help  pay off Hattons GST debt???

 That's the basis of a process that this Australian GST process should operate on. If the ATO can detect such movement of funds, then the ATO can levy the 10% GST on any payment going to an overseas supplier, and the job is 100% done. I don't have a problem with that and neither will any overseas retailer, it's Australia's law, joyfully made possible by Australia's voters, all Australian business, and of no concern to anyone outside Australia.

[jjb1970]

I still think that the most sensible thing to do is what other countries do and just collect the charge before releasing the package. Simple and effective. Admittedly us consumers pay for the privilege of paying the tax and it would apply to all packages but I really can't see the point of giving sellers what amounts to a 75k duty free allowance. The Australian government warblers on about fairness for businesses but what is fair about a business that sells more than 75k being stung with these additional costs when rivals that can limbo dance under the 75k?

 

The fundamental flaw which I still haven't seen a convincing case to support is why Australia thinks its laws are applicable and enforceable in other countries unless the law in those countries enables such a process. So far I haven't seen anything to confirm that for example the UK government has decreed the businesses in the UK conducting transactions in the UK subject to UK law are now subject also to Australian tax law. This probably puts governments in an awkward position as many will not want to antagonise Australia by openly telling them to bog off but neither will they want to accept an infringement of their sovereign rights by making commercial activities within their own country subject to the law of a foreign country supported by enforcement powers. The UK government seems to have acknowledged the new Australian law without offering much guidance. Ultimately it will have to be tested in law but I suspect Australia may be on a sticky wicket if they try to use civil debt collectors unless they can identify the applicable local, not Australian, law which has been contravened.

[PatB]

I strongly suspect that the Australian government line is primarily for home consumption in a "Look, we're doing something to protect your price gouging legitimate business practices" signal to major backers of the current party of government. As a bonus, it might suggest to the dimmer/more gullible consumer that there's no point searching Ebay/AliExpress/Amazon/whatever because once tax is levied there's no advantage (yeah, right). I'd be surprised if even the current shower of idiots in Canberra really believe that the ATO can impose its will north of Cape York.

 

And, perhaps, to discourage overseas companies from selling into Oz by making it look too difficult and/or risky.

 

At risk of breaking the no politics rule, I'm confident that the move is purely political and a sop to powerful vested interests rather than any kind of realistic and practical effort at revenue protection.