(23 February 2011 – Australia) Andrew Cartwright, MasterCard’s Australian country manager, has said that the task of credit card providers collecting GST on internet purchases would be almost impossible.Many of Australia’s major retailers, including Myer, Harvey Norman and Just Group, have called upon the government to scrap tax exception on purchase made from off-shore websites, which are currently free of GST and import duty for sales up to A$1000.
A review last year by the Board of Taxation found that the administrative costs associated with imposing GST on low-value purchases would outweigh any revenue benefit.
Despite this retailers are saying that the tax could easily be added as a surcharge to online credit card transactions.
However, MrCartwright said it was not as simple as imposing a 10 percent surcharge on purchases from foreign-registered internet domains.
‘I think it would be difficult. Who is going to police this in terms of jurisdiction over foreign retailers?’ he said.
Mr Cartwright said further complexities would arise when an Australian shopper was buying something to be delivered to the country in which it was bought, such as buying a gift online for a relative in the US.
‘There’s hundreds of thousands of overseas-based online shopping sites, so it would be very complex to police all of these online shoppers,’ he said.
‘If I want to buy my mother in London a Harrods Christmas hamper, I don’t want to be paying the Australian government 10 per cent on that purchase.’
The Productivity Commission is set to examine the taxation of internet purchases as part of its inquiry into the retail sector.