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Australia to tax o/s online purchases?

Posted by Michael Bloch in ecommerce (Friday November 26, 2010 )

In Australia, consumers can currently buy goods online from overseas merchants up to a certain amount without being slugged with our 10% goods and services tax. That may be about to change as the penny has dropped with retailers that people do buy stuff from beyond our shores over the Interwebs.. and a lot of it.

Back when I started seriously getting into affiliate marketing, getting commission checks from the USA was oh so sweet as the currency exchange at the time was around 56c; i.e. the Australian dollar was worth 56 U.S. cents. Recently, we hit parity with the greenback and while it’s dropped back a little, it will probably nudge it again.

This means I basically have to make nearly twice as much as I did back in 2001 in terms of US bucks to make the equivalent in today’s Australian dollars. Boo hoo for me, them’s the breaks.

However, the ultra-strong Aussie dollar has also seen more Australians spending their bucks online with overseas merchants. Additionally, Australian tax laws allows individual purchases of up to $1000 before our wonderful 10% GST is applied.

The government is considering dropping that threshold though after an outcry from local retailers who say the volume of overseas purchases is starting to impact their bottom line.

According to this report on the ABC, Harvey Norman boss Gerry Harvey is one of those retailers. Harvey Norman is one of Australia’s large retail chains.

The really interesting thing about this chap is I’m quite certain I saw an interview with him years ago where he turned his nose up at the Internet, thinking it wouldn’t be much of a sales channel for his company, nor did it pose much of a threat to their business. I remember hurling abuse at the screen as at the time, I was trying to encourage local businesses to get online and into ecommerce and explaining to them why the Internet would, to borrow a term, “change everything”.

Back in those days, seeing a web site address on an Aussie shop window or in a TV ad was still a rarity, now it’s commonplace.

It never ceases to amaze me how the Internet crept up on some of our most clever business folks and bit them on the butt – Mr. Harvey is certainly not alone in that (assuming my memory of the interview is correct).

The Harvey Norman site is now a far cry from just a few years ago as they are starting to understand the amount of cash flowing through the tubes of the Interwebs; however, you still can’t buy anything from them online. Mr. Harvey might want to address that issue too as they are leaving a ton of cash on the table.


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