Government mulls online shopping ‘lockouts’ in GST crackdown

TREASURER Scott Morrison has denied suggestions he will block foreign retailing websites which don’t pay GST on the goods they sell in Australia.

Retail therapy is about to change in Australia.

TREASURER Scott Morrison has denied suggestions he will block foreign retailing websites which don’t pay GST on the goods they sell in Australia.

Mr Morrison’s spokeswoman told AAP on Wednesday the government had no intention of blocking websites to enforce new tax rules.

She said the Australian Taxation Office was one of the many government agencies that may seek to have websites blocked to enforce the law, but it has never used this power because it is generally aimed at preventing the serious criminal activity, fraudulent sites and national security threats.

It came after warnings the federal government was mulling its own Mike Baird-style lockout laws by blocking Aussie shoppers access to overseas retailers that fail to collect tax revenue for the government.

Consumer group Choice warned that from as early as July 2017, Australians may find themselves unable to access the websites of a number of their favourite overseas stores under a plan being considered by Treasury.

Under new tax regulations coming into effect next year, overseas businesses with an annual turnover of $75,000 or more will be required under Australian law to register with the ATO to collect GST on all goods sold, including purchases under the current low-value threshold of $1000.

The group warned that the Federal Government was exploring the option of blocking websites that fail to co-operate using powers under section 313(3) of the Telecommunications Act 1997.

The act, which allows the government and its agencies to block websites that breach Australian law, contains provisions for the protection of revenue.

While large retailers such as Amazon and Book Depository are expected to fall into line, smaller websites are most likely to be caught out under the new regime.

Niche cosmetic brands like Charlotte Tilbury or Glossier, and non-standard sized clothing brands like Long Tall Sally and Pink Clove, for example, may be affected.

“Being able to access overseas websites allows consumers to purchase products not available in Australia, making up for the failings of some domestic retailers,” Choice spokesman Tom Godfrey said.

“Blocking these sites will disadvantage Australian consumers while providing absolutely no benefit to the local economy.

“When these tax changes are implemented, consumers who rely on these stores could be denied access to niche retailers who fail to voluntarily collect GST and send it to the Australian government.”

Mr Godfrey said it was unclear why foreign retailers would adhere to Australia’s tax change, so “ultimately consumers will be denied access to a range of overseas retailers”.

“This policy change threatens to get very messy very quickly,” he said.

“Overseas retailers have no obligation to comply with Australian tax laws, and we all remember ASIC’s attempt to block a handful of websites in 2014, when it accidentally took down over 250,000 sites.”

Mr Godfrey said there had been no modelling or information released by Treasury about the expected impact of changes to the low-value threshold. “There is no guarantee of economic benefit to Australia but it looks like inevitable loss for consumers,” he said.

A number of government reviews have previously recommended no changes to the GST rules on purchases under $1000 until a new approach to processing imports “without creating delivery delays or other compliance difficulties for importers and consumers” can be found.

However, the Australian Retailers Association has argued international retailers already have mechanisms in place to be able to accept GST at the point of purchase.

Choice says it supports a “level playing field”, but “has long pointed out the lack of a business case showing any benefit from applying the tax to low-cost consumer imports”.

A recent draft Productivity Commission report into intellectual property rights recommended that the Copyright Act be amended to “make clear that it is not an infringement for consumers to circumvent geoblocking technology” such as virtual private networks (VPNs).

Phil Bishop, founder of homegrown VPN service VanishedVPN said many of his customers used the service to do overseas shopping. “For example, you can actually save about $250 by buying an iPhone from the US and getting it shipped back to you,” he said.

But he said while “we’re in the business of letting people bypass geoblocking” on services such as Netflix, VanishedVPN didn’t support illegal activity — including tax avoidance. “At the end of the day if [the government] is enforcing the law, we support that.”

Mr Morrison, appearing on Paul Murray Live on Sky News Australia on Tuesday night, said the power to shut down a website was not new. “What we are doing is lowering the threshold in terms of how GST applies. That provides a level playing field for Australian retailers,” he said.

“The tax office has any number of ways of enforcing that arrangement, the one that’s referred to is the ability to shut down a website. Now, that’s been around for decades. It’s a power that has been there, we haven’t created it, it’s just one of the many things that the tax office can use. It hasn’t been used [by the tax office], so there’s nothing to suggest to me that this is something they’ll put on the top of their list.

“Chris Jordan will deal with these matters sensitively. What we’ve done here — another thing we’ve done over the last 12 months — is ensure that we’re implementing this plan, which means retailers here at home are on a level playing field when it comes to the GST with those they’re competing with offshore.”

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