Printable View
I notice there is talk about trying to levy GST on imports worth less than $1000 using the argument that it is bad for local business having to compete on unequal terms with overseas companies who sell on the internet.
Do Australian companies exporting send the goods GST free in the same way and, if so, is it levied by the overseas countries at their rate.
Are local businesses really suffering through the current GST policy on imports?
Any facts or thoughts?
Cheers,
Jim
GST is not charged on goods and services sent overseas, that includes overseas airfares. As for other countries tax regimes on imports that depends on that country.
There is an issue regarding those effectively operating online in Australia but based overseas using sites such as Ebay. These are operating at an advantage to a similar Australian based business and we all pay for this and shouldn't be.
As for the $1000 limit, I doubt eliminating that will make much difference, the cost of freight probably negates the gain, the real issue is the difference in base price which is often far greater than a 5% tarrif plus 10% GST. The cost of collecting such a tax on all people bringing in duty free from their trip or posting home would possibly be far greater than what they would collect, and much would still be missed unless we start opening all parcels as they arrive.
The perceived loss of sales to local retailers is purely due to the price saving by buying overseas. GST is not the issue - except perhaps for the government.
In most cases, even if we were forced to pay the GST on imported goods, we would come out well ahead.
If a local business is selling to an overseas buyer, then there is no GST payable. There may be a GST or VAT imposed by the buyers country but that is not the responsibility of the seller.
It will happen no doubt, given we have a government who pander to the Left instead of getting on with real issues. :~
Thats just showing your own political colours, the legislation was set in place by the blue team, and other than a few soothing noises there is absolutely no sign the red team intend changing anything. Lets not mistake casual words with anything resembling an intention to spring into action. :;Quote:
Originally Posted by Waldo
Not quite, a look back at last nights Lateline Business will confirm that Labor are going to look into it.
Government considers GST on internet shopping - ABC News (Australian Broadcasting Corporation)
And all of this has come about because of poor old "Hardly Normal" who fears that someone else may be saving a $ and not buying from him at his inflated prices. The prices would have to be inflated as he buys from overseas at a better price than you or I could and he has to pay for those moronic, incessant, mind numbing, boring excuses for TV adverts. Let's face it, if he halved his advert budget the message would still get out [to those who may be slightly interested] and he could then afford to lower his prices so that he could compare more favourably with those buying in from overseas.
Harvey keeps his advertising in-house and is the most desirable ad budgets in Australia, and every agency would love it if he outsourced it. His budget is the largest non-governemnt annual budget of $300,000,000 over Australia, Ireland, Slovenia, Singapore and Malaysia. $130,000,000 was the spend in Australia last year.Quote:
Originally Posted by Bob38S
I wonder if he pays GST when he runs ads overseas? :)
How nice it is to see that he spreads the wealth around.Quote:
Originally Posted by Waldo
However, if the adverts I have seen [when the mute or channel changing button are not quick enough] are an indicator of what this sort of money buys then I should feel sorry for him as he is being short changed. I wonder if he gets to write off his advert budget on his tax? :roll:
What frightens me is that there is a whole industry that does nothing else but think up that mind-numbing garbage and we are subsidising it to the extent of the tax deduction.Quote:
Originally Posted by Bob38S
Cheers,
Jim
I'm with Bob38s.
Its just another 'have' trying to bash the 'wish they hads'.
Australian 'white goods' sellers are not affected in any meaningful fashion by sub-$1000 imports - how many people could really import a fridge or stove? OzPost won't handle anything more than 1 metre long.
Harvey Norman used to sell second rate products at a good price, they now sell third rate products at a considerable premium over Australian retail prices (e.g 1 Tb USB drive $149, sells elsewhere for $95) and the staff treat the customers like excrement. All Gerry and his ilk want is to make Australia into a 'company store' where you have no choice about where you shop & you have to pay inflated prices.
The issue of people buying goods overseas comes up from time to time and is a political, not a true economic issue. Australia suffers enough from the lack of proper competition and an attempt to restrict Internet buying is not warranted because as we know, the major retailers have not suffered at all, they just want to charge prices that are often the highest in the world. They can only do that without internet competition.
The rules for private importing were made under the previous government and the special interest groups failed to have things changed. They think that the Labor government may be persuaded to make things more difficult for Internet shoppers. They will dangle employment as an issue. It isn't of course because they only want to levy higher prices,
Let's hope they don't succeed.
Many years ago - ie well before the web - I ordered some "cheap" software on 5.25" floppies from Singapore. A week or so later I got a telephone call from the post office to come in an answer some question about a package that had arrived with my name on it. Terrified that someone had placed some white powder inside my package I went in where they asked me to open it which I did and all that was inside were a couple of dozen floppy discs. Several customs officials came to look at these strange items and ask me about them - one of them even held them up to the light and looked at them like they were film! They then asked me the value of the package which had no paperwork with it. Fortunately the company had sent me a receipt by snail mail so I went home to get it. I was then interviewed by a senior customs official who told me I was going to be charged duty on the floppies themselves - not the software because they had no schedule for software. Anyway it turned out that the amount was going to be $18.10c and as it was less than the point at which they started collecting ie $20 there would be no charge. All up I guess this took me 3 hours.
One of my last jobs before I retired was working for Hardly Normal I could tell you a few stories about their practices but legalities prevent it.Never purchased anything from them since.:((
Hardly Normal can whistle all he likes about losing profits to people buying overseas and it won't do him any good. The amount purchased wouldn't be a high enough revenue raiser for the government to seriously consider taking it seriously. Just because NZ is trying to tax thier population into teh ground isn't a reason for us to do the same.
(When I am feeling very depressed I go to my local HN store and follow the computer sellers mumbling "liar, thief, numpty, scham merchant bull artist" etc until I feel better and scare off a few customers" - Hey it's a hobby. )
Solomon Lieu :smack: just had a cry on Lateline Business, essentially he and others are calling for protectionism on the retail sector. Maybe I should petition the government for protectionism on the ad/design industry - somehow I think that would fall on deaf ears.
Success against competition is all about innovation and adding value on your product/service.
Interesting isn't it in the '70's and 80's as the Australian clothing manufacturers were hitting the wall one after the other under the weight of cheap overseas imports brought in by Lew and others there was silence from the retail industry as they reaped the profits. Now they are feeling the small sting of competition from the online industry they are seeking protection.
It is a problem for us if we kill retail because it is a large employer of unskilled and semi skilled labour just as manufacturing was. However any national discussion needs to look at this across all sectors not just the import reliant retailers. The words pot, kettle, black apply here.
Yes it's funny isn't it. Gerry Harvey made his money undercutting the traditional department stores, now he's crying because online is killing his business.
The customs threshold was raised under howard because the administration of the previous threshold was costing money. Think about it, on a $1k item they can make at most $150, but to collect that they ahve to open many many packages most of which won't yield a return, then they have to collect the tax. The previous threshold was $250 or $400 or something, I can't remember. Imagine all that trouble for a lousy $37.
Most of HN's product line is too big to economically import privately, and more is 240V which brings other problems. Maybe he's losing accessory sales, but not fridges.
As has been pointed out the savings are in the order of 40% (or whatever) not 10% so all they will achieve is bad feeling next time you, me and them need a fridge.
Hi,
This isn't a beef, more an explanation.
Originally 5 or so years ago, you could import $250.00 (goods + freight) without doing a formal entry. Great convenient and logical. BTW Customs don't open every parcel, they rely on the integrety of the declaration most of the time.
When the threshold was lifted to $1000.00 it was logical with countries that we have a Free Trade Agreement with e.g. USA, provided the goods were made in the USA. But as many goods (particularly electronics) are manufactured in Asia and either direct imported or distributed through the US the government not only misses out on GST but Duty as well!!
From our perspective it isn't too bad until we get the 'phone call..... "My brother in law picked up an XYZ in the states when he was there, it doesn't work, you're the agent fix it please" OK we try to help but that's effort we could be putting into our customers.
Direct importing and distributing is expensive when done in volume (like us) all the add on costs are significant, Product Liability Insurance, Customs Brokerage, Bank Charges etc. etc.
Individual importers generally don't factor in all the costs, shipping, exchange rate and bank fees (the banks love it when you buy with a credit card from overseas). Also, what happens if there's an issue with the product???
Hardly Normal shouldn't be beefing too much as bulk (size) and voltage are good reasons not to buy their product lines overseas.
Again, my thoughts not a beef... well maybe just a little one.
Regards
Grahame
HI jimbur,
Having noted other comments - it is easy to focus on the real issue. With the exchange rate as it is - we can buy goods at about 50% of the retail costs here and when you add postage the saving is about 30-40%. So can I suggest to some of our retailers that they think about their prices more realistically. People are price driven, irrespective of loyalty. Drillit.
Bill Shorten was on the ABC News tonight and emphatically stated that there would be no change to the GST regime for imports or that the limit would be lowered.
He repeated himself several times and stated that our local retailers would have to learn to compete with internet sales as they were a fact of life.
So it seems that issue has been laid to rest and Mr Harvey will have to live with that.
I think the problem the retailers have is the Internet makes it easy to shop around. This is a game changing issue and it is not about GST. I know when I shop around however, I sometimes spend more on the petrol visiting stores than I save on the goods, but if you find it online the delta cost to shop around is much less.
The shelf price of things in HVN et al is usually not the lowest you can buy in Australia. Usually you can find a domestic retailer that will save you 20+% even though you are still paying GST and it comes from a local business.
And buying overseas isn't necessarily cheaper. Yesterday for instance I finally bought a Veritas honing guide form Carbatec for $79, (admittedly a sale price, but that is part of shopping around). The Lee Valley price is Can$64.50 and if you buy it in Canada you get charged GST of around 15%, depending on Province, which in the end works out to be about the same as my local buy price.
The 'debate' seems to be heating up. I noticed last night an item on the ABC bewailing the problems it is causing to small businesses.
Jim
Myer and Hardly Normal came out last night saying that they are going to set up online "stores" in China and ship straight to the buyer.
Many years ago there was an article in one of the IT mags re Australian bricks and mortar business never fully appreciating the concept of online sales. The article suggested that they have a second class approach to the concept of net/online sales. The web sites were below par and hence not conducive to online buying. Much has not changes in this regard.
The cry of the high value of the Aust $ cf the US $ is trivial and just an excuse. When the parity was about AUS$1:0: $US0.60 it was in many cases still viable to say purchases reference books from Amazon than try to get them locally. Amazon was quicker in delivery as well.
As for small businesses, most are self destructive.
I ordered 3 grinding wheel from one of the local industrial suppliers. This order included me paying the transport costs. 5 weeks later still no grinding wheels even though Norton has plenty in stock of what I want. Yes I rang Norton to check before I made the order.
So don’t expect me to be sympathetic to small business as most fit the above scenario, especially when outside the big cities.
Perhaps there should be an inquiry on markup prices in Australia before these businesses start bleating too much.
Before the internet, the yanks did mail order very, very well. They still do. I think the difference is that they set out to make that their business model from the outset, rather than trying to catch up later.
I remember back in snailmail days ordering something from the States, and being very surprised when the item arrived within 3 weeks. Various local vendors hinted at 6 months - maybe, if they could get it...
Not just the yanks. I worked many, many years ago for a bookshop in the UK where the main volume of sales was to overseas customers. Turnround was usually the day the order arrived and that's going through a typing pool as well as the packing department.Quote:
Originally Posted by q9
Cheers,
Jim
You will have the same experience today ordering from well set-up and well run US online businesses. They really do have it all over the bulk of the local retailers in terms of stock levels, shipping systems and customer service. Not to mention price.Quote:
Originally Posted by q9
Harvey Norman and Myer have had 15 years' warning that online retail was going to be a game-changer, and they've done basically stuff-all to prepare themselves. Gerry Harvey was known to be highly skeptical of the potential of online retail. Seems that skepticism is backfiring on him now.
When I consider the choice of dragging myself out through Sydney's horrendous weekend traffic to one or other retailer only to be told that the person I spoke to on the phone was wrong and that in fact they don't have stock of whatever it is I'm looking for, and that in any case it's three times as expensive as US retailers are selling it for, and that it will take months to come in; or sitting at home looking at products online, comparing user and expert reviews, and placing an order - well, there's no comparison, is there?
Why would anyone be surprised that Australian consumers are turning to US sites that are only too happy to ship their stock across the Pacific?
If Australian retailers genuinely can't get bulk stock into their stores for less than I can ordering individual items and paying individual shipping, then that is something that the government should look at.
But there is a big difference between "genuinely can't do it" and "have been too lazy/shortsighted to set themselves up to do it".
If you look at computer component retail, you will see that there are now a slew of Australian online sites that sell product, with local invoices, at prices almost indistinguishable from their US counterparts. They've managed to do it - other retailers need to start competing too.
The 240v argument might carry some weight - unless you took even the most cursory look at UK tool retailers.
Amazon and the like have been busy relaxing their shipping restrictions on tools and hardware, among other categories.
If I were an Australian retailer in that space, I'd be either getting very nervous, or I'd be employing some really good web developers and fulfillment specialists.
We've been told ad nauseam by the same retailers that it's a new world out there and if we can't manufacture as cheaply as other countries it's just our hard luck. Get the same competition in the retail as in the wholesale sector and they don't like it. Most of us check the prices of items online before using local retailers. If it makes sense to buy from a local store whether for convenience, back-up (insert hollow laugh), knowledge of the product etc. then we do it.
Cheers,
Jim
HN worries may have come from the plan announced by Myer to set up an internet store for Australians in China. Time will tell how it will do but I think the real reason they are doing this is not about GST, it would be about not having to employ Australians at our wage rates.
While they will reduce costs by employing Chinese instead of Australians, I doubt that they will also take a cut in profits to be competitive.
I heard Gerry Harvey rabbiting on about this an ABC radio. He mentioned Amazon a number of times and his whole point seemed to be that local overheads were so much higher and he simply could no compete with Amazon.
It is interesting to not that a 16Gbyte Ipad , a fairly universal product, can be had for 529 US on Amazon (plus shipping etc.) and for 629 AUS at Harvey Norman.
For that difference, probably less than 50 bucks, I really cannot see too many people buying from Amazon, Then of course you have the problem that Amazon won't ship an Ipad to Australia.
I think Gerry Harvey has a totally different agenda, perhaps some sort of tax break for setting up an off shore online store.
What really pisses me off is when Australian distributors whack up the price of products beyond reason. I want to buy a Milescraft router pantograph. Made in China for a USA company, sells in the USA for 40 -50 bucks US. I can get it landed here for less that 70 AUS. The local distributor in Perth wants $155 plus shipping. The shipping from Perth is almost as much as from the USA. I would be willing to pay , probably $110 inc. shipping to buy it locally but not the way over inflated price they are asking.
Gerry Harvey and his mates at Myer and Timbecon can get.......
Regarding the "$1000 limit" on GST free imports.
It's not really a limit.
It costs the Government money to assess, collect and bank GST levied on imports.
At some point the amount of GST (and import duty where applicable) collected is less than the cost of collection so why spend tax dollars for nothing.
The "why bother collecting it" level is currently set at $100 -- which translates to $1000 in terms of actual goods
This could be changed up or down at the stroke of a Minister's pen
The move to an online shop operating out of China is really about putting the orders as close to the supply of goods as possible. At the moment, HN imports goods in bulk as a wholesaler, then distributes those goods to the francishes. All this time the goods are waiting to be sold to the consumer. It takes cash out of the business and leaves them exposed when the dollar goes up.
This move will free unsold inventory, and basically mean that any goods shipped will be already paid for by a consumer. Quite a good business model, albeit about 5-10 years behind the times, so certainly not revolutionary...
and yes...I have bought stuff from the states in the last few years, and thanks to online ordering and PayPal, often shipment occurs next day...
Amazon sources much of its products from USA based importers and manufacturers. Gerry Harvey hopes that most Australians don't know this. He can compete on price but chooses not to because his franchise system demands too many middle men in the retail chain.
However, the Aussie profit margin also seems to be way over the top for most goods. For example, identical washing machines and fridges in Asia and the USA sell for less than half they do here. Its not freight cost that does it but it is the importers and retailers ability maximise prices in the absence of any alternatives.
Competition is the only way we we see prices approaching reasonable levels. This is starting to happen in the flat screen TV market which I think is due to a couple of factors
1. Importers such as Kogan and other retailers selling direct
2. The flat screen TV market is maturing and is relatively saturated with many homes already owning flat screen TVs. Prices have to drop if they want to entice consumers to trade up.
Its doubtful we will be lucky enough to see similar price drops in other market segments unless there is more open competition from overseas.
The dilema for Government is the impact on GST and income tax revenues. If Myer and HN do well they may well pick up some extra company tax but will not pick up tax on Hong Kong employees wages or GST under the current regime on most purchases (not to mention unemployment benefits to any Aussies laid off). If it really takes off the revenue will have to be made up somewhere so one way or another and that will be through the tax system somehow.
I saw that and was genuinely surprised and pleased. :2tsup: Call me pessimistic, but I think it might have a lot to do with a government on a minority and more to do with voter backlash.Quote:
Originally Posted by Big Shed
But that aside, hopefully it is and will remain buried.
Let's hope so or we'll be paying twice - once for the GST on items of less than $1000 and again through the tax system for the money lost in collecting it.Quote:
Originally Posted by Waldo
Cheers,
Jim
I think Myer's scheme will come unstuck in a number of places. Firstly, Myer will be looking to charge you full retail less GST, plus freight - the end cost is lilkely to be quite high.
If they try to cut freight costs by importing in bulk, I'd expect Customs to hit the entire container load with a GST assesment as it is a single shipment from one supplier (Myer China) to a single customer (Myer Distribution Au.) not individual shipments.
If Myer also set up a Post Office in China for shipping, with every order separate, then it would not take much for Customs to make a declaration that the whole thing is an attempt to avoid tax by Myer (which it obviously is) and subpoena all relevant documents, hit Myer with a GST bill plus penalties.
why do this?Quote:
Originally Posted by bsrlee
full retail covers their stock holding and retailing costs in Australia plus their profit margin.
If something they sell here for $50 only costs $5 in China, why not sell it on-line for $20?
if shipping is $15, the customer who is paying a total of $35 still thinks they have saved $15 -- a bargain compared to Australian retail -- plus they have "saved" $5 in tax (GST)
Myer who might have cleared $5 in profit when selling the item in Australia (after overheads), has now made $15 in profit (300% profit in accountant's speak) -- the only loosers are Government revenue, Westfields who miss out on their "share" of Myer's turn-over and the reduced number of wharehouse and part-time sales jobs at Myer.
this is what happens nowQuote:
If they try to cut freight costs by importing in bulk, I'd expect Customs to hit the entire container load with a GST assesment as it is a single shipment from one supplier (Myer China) to a single customer (Myer Distribution Au.) not individual shipments.
it's not Myer who is avoiding the tax it's the customer. When you buy something from Myer, you are liable for the GST, Myer just collects it on behalf of the Tax Office.Quote:
If Myer also set up a Post Office in China for shipping, with every order separate, then it would not take much for Customs to make a declaration that the whole thing is an attempt to avoid tax by Myer (which it obviously is) and subpoena all relevant documents, hit Myer with a GST bill plus penalties.
Similarly, if you sell something to Myer, you are liable to pay the GST on the supply, and if you can't prove you will -- i.e. you don't have an ABN -- Myer is obliged to withhold 10% of the payment.
I don't see how a Myer or Harvey Norman on-line store in China would be any different to any of the existing Hong Kong or US on-line retailers