The federal government is proposing a GST on online services and products under $1000. The tax would apply a 10 per cent GST charge on ‘intangibles’ such as virtual books, movies, software and ebooks.
Fairfax Media reports that the ‘Netflix Tax’ is back on the cards for this year’s Budget. Despite rumours that the tax would be dropped because it would piss off ordinary voters who are looking to get cheap, legal content.
Currently, the Government doesn’t collect GST on overseas purchases from sites like ASOS, Netflix and Amazon. In 2012, it was reported that an estimated $1 billion a year is lost in revenue because GST isn’t being applied to services sold in Australia by overseas companies.
The cheapest Netflix package is $8.99 a month, making it a cheaper package than Australian streaming competitors who have to pay GST such as Stan, Presto and Quickflix. However the proposal would not affect iTunes downloads, Apple already pays GST on Australian sales.
Federal treasurer Joe Hockey has previously said that a Netflix tax is a necessary move for the Coalition. “I see those things as integrity measures for the tax base, not the broadening of the GST or an increase of the GST.”
“The states agreed in principle that we should move in that regard. I have offered to work as quickly as possible with them to introduce legislation to address that in relation to intangibles.”
It’s unclear if this tax would apply to other overseas owned companies which operate in Australia, like Uber and Airbnb.