Netflix Tax Introduced in Australia

February 11, 2016 Taxation in Australia

CANBERRA – Australian consumers may soon be stung with an extra cost on common online services, as the government takes a step towards its controversial plan of implementing a “Netflix tax”.

On February 11th the Treasurer of Australia Scott Morrison introduced new draft laws to parliament to expand the GST to include the purchase of digital goods purchased from overseas providers.

The proposed change to the GST rules, a move which has come to be called the “Netflix Tax”, is intended to “level the playing field” between local distributors who are liable to pay charge GST on all purchases made by Australians, and the overseas distributors who are currently do not fall under the scope of national GST legislation.

The current rate of GST in Australia is set at 10 percent, and no indication has been given that this rate will be revised following the approval of the “Netflix tax”.

If approved, the “Netflix tax” is expected to raise the collection of tax revenues by approximately AUD 350 million over the four years after its planned implementation in July 2017.

The passing of the amendment to the GST rules will not have any impact on the rules regarding the purchase of physical goods, and currently any items valued at less than AUD 1000 are not subject to GST if they are purchased from overseas suppliers.

Photo By: ozcast