Australian Internet Shoppers Could Be Hit By A 37% Tax, Warns Group

Australian internet shoppers buying goods from overseas could be hit by a 37 per cent tax if proposed legislation comes into force.

Australian consumer group Choice said the average parcel arriving in the country - currently worth A$38 - would end up costing A$56 if the idea comes into law.

It said it made the calculation based on a the 10 per cent GST level and the processing fee levied. It said three quarters of all online orders are less than A$100 and would all pay more in a likely 'processing fee' than the actual tax.

Local retailers are asking for a reduction in the A$1,000 goods and services tax (GST) threshold on imported goods. Choice said the lowering of the threshold would act as a strong disincentive to shoppers fond of foreign online stores.

Choice said levying the fee was the only way to collect the tax and provide a sufficient disincentive. It estimated the reduction of the threshold to zero would cost Australian shoppers A$823 million a year.

It applied the same level of fee as is applied on imports to the UK which it calculated at A$14. In the UK there is a VAT (20 per cent) tax charged on imports worth more than £15 and the processing fee is £8.

However, HMRC waives charges on anything where the tax raised would be less than £9.

The Australian Retailers Association Margy Osmond dismissed Choice's arguments as 'misunderstanding how the UK system worked'.

She told the Sydney Morning Herald: 'This is a discussion about closing a loophole in the tax law that is a hangover from when nobody shopped online'.