Prepare to pay more: Government set to slap GST onto online purchases

THE golden era of dirt cheap internet shopping, streaming and downloading appears to be over. Here’s how you’ll be slugged.

FILE - APRIL 16: According to reports April 16, 2015, Netflix has announced that it has topped 60 million subscribers, exceeding expectations and their stock price went up by almost 20 percent after the earnings report. PARIS, FRANCE - SEPTEMBER 19: In this photo illustration the Netflix logo is seen on September 19, 2014 in Paris, France. Netflix September 15 launched service in France, the first of six European countries planned in the coming months. (Photo by Pascal Le Segretain/Getty Images)

THE golden era of dirt cheap internet shopping, streaming and downloading appears to be over.

This is especially bad news for our nation of binge-watchers, with the government set to slap the goods and services tax (GST) on streaming services, such as Netflix.

The Australian reported on Monday that Cabinet ministers had killed off the policy, over fears that it would be seen as a “naked grab for more money”, but Fairfax reports this morning that the “Netflix tax” will be included in Tuesday’s Federal Budget.

Customers are set to pay 10 per cent more for movies, music, e-books and software provided by overseas companies online, with the Abbott Government set to extend the GST to these “intangible” products. Currently, the tax only applies to imported parcels worth more than $1000.

The good news is that the policy won’t affect the cost of iTunes downloads, with GST already applied to sales from Apple’s online store.

Treasurer Joe Hockey first floated the idea last month, saying the plan was an “integrity” measure, not a broadening of the GST.

Netflix said in April that it was prepared to add GST to the cost of its service once the government had passed the appropriate laws.

Assistant Treasurer Josh Frydenberg has reportedly advocated for the change, and he told the ABC that it was important to ensure a level playing field between Australian and offshore service providers.

He said Mr Hockey would reveal more detail in Tuesday’s budget.

A 2012 review by former NSW premier Nick Greiner and former Victorian premier John Brumby found that not taxing overseas companies cost the government about $1 billion every year in lost revenue.