GST'ing online purchases discussion

[Alanslegal]

The last few weeks have seen a giant size protest from large retailers (read Gerry Harvey) about consumers buying things online because they don't attract a GST and thus causing businesses to lose out as shoppers flock the internet and never shop in a store anymore.

I know I do alot of shopping online and I always utilise the duty free concessions when I travel overseas, and I would believe alot of you would also be doing the same.

Firstly, I am against any of the ideas Mr. Harvey et al have been suggesting over the past few weeks. I think the $1,000 limit is fair and reasonable, and that any limit less than that would mean more administrative work for Customs. And also the cost to administer that may potentially outweigh the benefits.

Secondly, buying from an online retailer whether locally or overseas is much more favourable as I don't have to pay the higher cost so that retail businesses require so they can pay their overheads.

Thirdly, alot of foreign items are much better value anyway, with or without the GST.

Fourthly, look at the hypothetical and practical side, if the GST was imposed on everything now does that mean Duty Free shops at the airports are now engaging in misleading and/or deceptive conductive?

Soo those are a few thoughts of mine ....... and yours?

 

[m_ratt]

1] I agree that the costs to administer would likely outweigh the benefit of increased GST revenue.

2] Ok, but the same benefit applies if you're buying from an Australian online store, and you would pay GST on those purchases - not quite sure the relevance of this point to the import duty topic.

3] Umm, ok. You can still buy imported goods from Australian retailers and pay GST on those purchases.....

4] Umm, ok. If the stores were no longer 'duty free', then clearly they would have to change name/marketing strategy, however that is not the case currently thus there is no current deceptive or misleading conduct.

 

[markis10]

Most electrical and telephone items purchased overseas would be illegal to operate here anyway, something that gets overlooked in the debate over imported shopping.

Local retailers pay for the cost of getting goods approved and certified for local sale, often they are making less money than the overseas retailer because of local regs such as Ctick, A tick, MEPs, Electrical Safety etc.

 

[Mal]

The problem is that the cost to administer such a policy would far outweigh the revenue brought in. Of course Gerry & co are more than happy to import items from China themselves at ridiculously low rates and then slap on their profit margins (and costs) and sell at ridiculous prices.

Gerry and his friends should be chasing down their importers and telling them to improve the prices we pay. Surely if I can import (say a pair of Nikes) into Australia for a huge cut from what I would pay at Foot Locker, then someone is making a huge amount of money...

Or how about chasing down Westfield and the ridiculous rents they charge tenants?

The sad thing is that even when GST is added to imported goods, I will still be able to buy overseas cheaper in a lot of instances. I wouldn't change this behaviour, and Gerry and co still don't get any more money from me...

 

[anat0l]

Overall I think it's a foolish push by the retail association.

I don't really get it (I should read up more), but people are buying more from overseas merchants (or merchants who base themselves overseas, i.e. their registered company address is overseas even if they deal with Australian customers), then get them shipped to Australia.

If this is the case, then as markis10 alluded to, one has to think whether these items can be operated in Australia (i.e. legally and/or due to electricity differences). In a lot of cases the answer is probably 'it is possible to do so'. Then again, what potentially stops some stores from keeping their "Australian" supplies in overseas warehouses and then sending these to customers in Australia? They don't need to store them in Australia, and since they don't operate in Australia they don't need to worry about GST. And neither does the customer.

As for local regs, I'm not familiar with that, except for in cases where perhaps electrical equipment needs clearance and testing to be used in the workplace. For personal use it may be not a big deal, but other issues to consider are voltage, plug type (earth pin?) and standards (e.g. PAL vs NTSC).

It's also a furphy campaign for reasons alluded to by Alanslegal, in that there could be a swag of goods overseas which are cheaper even if you add 10% (plus 3% currency conversion fee, perhaps, and shipping charges if necessary). On the other hand, there could be online retailers in Australia which are already involved with GST (as required), but their prices are cheaper anyway. This campaign would and should do nothing for them - charging them 10% more than they already charge even though they already report and charge GST is ridiculous.

So overall it's a ridiculous initiative, unless I've overlooked some major points or misunderstandings. If online is turning into a better model of business then making regulation that will try to "compensate" for its savings vs. traditional business-as-usual face-to-face selling is not appropriate. Does that mean there is no place for face-to-face shopfronts any more? I don't think so - I think there is still a place for it, but of course they won't be happy with the cuts into their profit margins. Also, does anyone have any experience as to the customer support processes and quality of those processes for online stores?

So much for people being concerned of not being able to talk to a human.... as I argued before (read: NGCI) people will give up the "privilege" of not being able to talk to a human if something saves them time and/or money!

 

[Stephen65]

The complaining about the GST exemption by Australian retailers is a complete furphy. People aren't shopping online overseas to save on GST because the shipping is often more than the 10% plus you have the delay, higher risk and difficulty of doing a return.

They are shopping online overseas because the same product can often be bought for vastly cheaper prices. To give two recent examples: a pair of hiking boots I wanted - $429 in Melbourne, $180 including shipping from the UK and a Lego set for my son: $150 in Melbourne, $70 including shipping from the US. I'd still buy these online even with GST.

This suggests one (or both) of two things are happening:

- We are being ripped off blind in Australia by retailers here; or

- Australian retailers are hopeless when it comes to negotiating with wholesalers and distributors.

How else to explain the vast differences in price for identical items?

 

[kpc]

The complaining about the GST exemption by Australian retailers is a complete furphy. People aren't shopping online overseas to save on GST because the shipping is often more than the 10% plus you have the delay, higher risk and difficulty of doing a return.

They are shopping online overseas because the same product can often be bought for vastly cheaper prices. To give two recent examples: a pair of hiking boots I wanted - $429 in Melbourne, $180 including shipping from the UK and a Lego set for my son: $150 in Melbourne, $70 including shipping from the US. I'd still buy these online even with GST.

This suggests one (or both) of two things are happening:

- We are being ripped off blind in Australia by retailers here; or

- Australian retailers are hopeless when it comes to negotiating with wholesalers and distributors.

How else to explain the vast differences in price for identical items?

Agree 100%. Recently bought a book online from O/S for AUD$24+; price of same book at Borders: $49:evil:

 

[trippin_the_rift]

Those large chains complaiing (DJ's, Myer, Harvey Norman) also are some of the only businesses not to have an online store already.

Infact, Mr Harvey has been against taking his stores online since 1995 and also refuses to spend a dollar on internet advertising.

 

[ButFli]

Fourthly, look at the hypothetical and practical side, if the GST was imposed on everything now does that mean Duty Free shops at the airports are now engaging in misleading and/or deceptive conductive?

Duty Free shops mainly (only?) deal in alcohol and cigarettes anyway. These ordinarily have large excises on them. Even if "duty free" shops had to charge a 10% GST they would still be able to offer significant discounts on alcohol and cigarettes because they still wouldn't have the excise.

Agree 100%. Recently bought a book online from O/S for AUD$24+; price of same book at Borders: $49:evil:

The law that keeps the price of books high in Australia is the one that gives local publishers first dibs on publishing books here. Retailers can only import books from overseas if no Australian publisher makes it available within 60 days of its overseas release. This gives Australian publishers no competition and allows them to set whatever price they want (almost). A good example of this in action is the early books in the Twighlight series which for whatever reason were not published in Australia within the 60 days. Retailers are free to import overseas editions and are able to sell them at prices that are competitive with overseas online retailers. The same sort of rule used to apply to music until it was repealed and JB Hi Fi came along and made a killing selling us reasonably prices CDs.

 

[Stephen65]

That's why I have literally bought hundreds of books from amazon in the last ten years and almost none from Australian booksellers. Same for DVDs and Blu Rays.

I'm now branching out to buying clothing, footwear and toys from overseas. It really is incredible how much cheaper you can get the same item or items that cannot be found at all in Australian shops.

The high A$ certainly helps. According to todays Fin the A$ is at its highest level against the GBP since 1986 which reminds me I ought to go and check my amazon.co.uk recommendations.

 

[drron]

Clothing,footwear,toys,cameras,computers are so much cheaper OS that even if I had to pay GST I would still purchase OS.
As for Australian Duty free stores-I can buy alcohol cheaper in a US liquor store than duty free Australia.Having also just arrived in NZ and purchased Duty free on arrival with mrsdrron's frequent buyers card(thanks serfty)I would not shop at an Australian airport again-our new suitcase was cheaper in DJs than duty free at SYD.

 

[Mal]

Most electrical and telephone items purchased overseas would be illegal to operate here anyway, something that gets overlooked in the debate over imported shopping.

For smaller electronic items - maybe. But most of the "big name" type appliances with power packs, they are regulated for many countries and have the right ticks. (Laptops, cameras etc)

Phones are a little different. Some are regulated for use in Aus, some aren't.

 

[markis10]

For smaller electronic items - maybe. But most of the "big name" type appliances with power packs, they are regulated for many countries and have the right ticks. (Laptops, cameras etc)

Phones are a little different. Some are regulated for use in Aus, some aren't.

Thats not true Mal, while they have the C tick marks etc, they probably dont meet the MEPs standards and the cord will need to be changed to ensure the plug is sheathed.

We deal with one of the larger networking companies in the world and they have all sorts of issues with supplying plug pack type gear that has a PSU that is MEPs compliant and more often than not we supply the cord locally that meats electrical safety requirements. That adds up to $50 to a $1000 retail product that overseas is not required.

We have a few pallet loads of PSUs that meet world standards that dont meet our standards, we do quite well out of the copper in them

 

[Mal]

Thats not true Mal, while they have the C tick marks etc, they probably dont meet the MEPs standards and the cord will need to be changed to ensure the plug is sheathed.

But if a standard two piece pack, then you normally do have to change the plug section (either 8 figure or 2 leaf clover depending on the device). Shouldn't this then be qualified for Australian usage? (assuming you bought the cord from DSE or somewhere similar?)

 

[medhead]

Glad someone raised this. I'm too lazy/drunk to read all the comments so far in detail. Sorry

My take on this push, in general, is that the retailers are saying that people are not allowed to have a imported goods allowance when travelling. that is the end of the line of this push against things purchased online.

A factor-oid that I think I read in the AFR is that internet sales represent only about 5% of the retailers sales. So this campaign is an indication of how much they are hurting, since the are pushing so hard over such a small erosion of margin.

I agree that some people importing lots of sub-$1000 shipments probably needs to be dealt with, but I thing the current GST laws already cover this.

Finally, I would just recount an experience that I had with Apple. Ordered some Apple gear online with the plan to take O/S and claim back the GST. The items were put on back order and shipped separately direct from China and then resulted in 2 invoices once of which was sub the GST refund cut off. I had a big argument with Apple to get a consolidated invoice issued. They finally capitulated when I raised the GST issue, looking into the legislation and confirmed by Customs; because Apple had shipped the products directly to me from China my products were actually GST exempt. Apple had incorrectly charged me GST that they technically didn't have to pay as tax. I hit them with this and asked about the the apparent incorrect collection of GST. Consolidated tax invoice was issued the next day. I did care to follow the matter up and I'm sure Apple are correctly paying their GST. But it seems to me that is a big potential loophole and the retailers might be better concerned with worrying about any potentially dodgy retailers who might be pretending to collect GST on imports.

 

[markis10]

But if a standard two piece pack, then you normally do have to change the plug section (either 8 figure or 2 leaf clover depending on the device). Shouldn't this then be qualified for Australian usage? (assuming you bought the cord from DSE or somewhere similar?)

No, most PSUs in the world are not MEPs compliant, we are leading the world on this to a point and it means it also comes at at a price.

http://www.energyrating.gov.au/meps1.html

 

[Mal]

No, most PSUs in the world are not MEPs compliant, we are leading the world on this to a point and it means it also comes at at a price.

I traced a couple of articles I own, and still can't see how it would be restricted...

 

[albatross710]

Post-GFC there are still quite a few adjustments being made. Australians are spending less ie saving more and/or reducing their debt. This will have excellent long term benefits. In the meantime retails such as HN, have to adjust to the new world order. They can make a reasonable margin on supplies where people see value in what they offer.

The large box retailers used to be the only people with clout to negotiate the good buys. Now anyone can negotiate through ebay or tarde buys through China Direct, China Sourcing.

HN does offer convenience. They have 1.5Tb drives for <$100 and were open on a Sunday afternoon when I needed one to get out of a jam. For this they need to make their margin.

There are limited days of making margin without offering a level of value-add.

Jerry is an astute marketer I think we will see a transformation of the HN business to adapt to the new world order.

 

[GladstoneTim]

Slightly OT....
Doesn't Dell warehouse all their supplies O/S and ship them airfreight overnight based on orders? Is this causing similar problems to what Gerry Harvey and his cronies are complaining about? But Dell still charge and remit GST.

 

[markis10]

I traced a couple of articles I own, and still can't see how it would be restricted...

If it has not got a MEPs approval it's illegal to import, in theory