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10 million GST-free items imported each year: Report

By Michelle Hammond
Friday, 29 April 2011

New Customs data reveals there are more than 10 million parcels being imported into Australia every year under the $1,000 threshold, suggesting the Government is missing out on a potential $100 million in lost GST annually. 


The data comes as debate continues to rage over the impact of online shopping on bricks-and-mortar retailers, with National Retail Association head Gary Black claiming 50,000 jobs are at risk over the next few years due to the increasing popularity of online shopping.


Preliminary data from the Customs department appears to show the number of parcels being imported under the $1,000 low import tax threshold exceeds 10 million every year.


The Customs and Border Protection Service has published this data as part of a campaign designed to investigate whether goods shipped from overseas are being undervalued to escape paying GST. Currently, goods worth over $1,000 are subject to an imports tax.


Retailers are concerned that with the strength of the Australian dollar, more people are shopping online and international companies are taking advantage of this to avoid paying GST.


But the data shows that most of the goods being shipped into Australia under the threshold cost under $100.


In total, there were 7,579,585 consignments recorded in the nine months to March 31, 2011, compared to 8,020,565 in the 12 months to June 30, 2010.


The data does not distinguish between goods purchased online and through other means.


The data has been published, in part, to assist anyone interested in preparing a submission for the Productivity Commission inquiry into the low value import threshold. It contains data of air cargo reported to Customs and Border Protection.


The category of goods valued between $901-$1,000 contained only 77,540 consignments – the lowest out of all the categories – with a total declared value of $73 million.


Jason Picknell, founder of postal company Parcel Express, says while the data is only a snapshot of the Custom department’s audits, it does appear to show there isn’t a high incidence of rorting.


“This just reaffirms what we already know – there aren’t a lot of high value items being purchased online because, in part, consumers are concerned about making high purchases and it’s a new market for many,” he says.


The data comes weeks after the Customs department published preliminary findings of an investigation into the low value import threshold.


The Customs data revealed in March does show that some are taking advantage of the system. There were 2,000 consignments identified as having some form of non-compliance, resulting in $1 million of deferred GST.


Picknell says the amount isn’t enough to justify lowering the tax threshold.


“There are always going to be people out there rorting the system, and that’s why there are checks and balances in place,” he says.


“What I think is happening is that there are people hoarding and selling for higher prices, but I don’t think there are very high incidents of that occurring.”


However, the Fair Imports Alliance says the Customs figure is understating the amount of lost GST, pointing to the Productivity Commission’s Issues Paper released last month, which states the amount of lost GST is more likely to be around $460 million.


FIA spokesman Brad Kitschke says the issue needs to be addressed.


“The Productivity Commission paper identifies about $460 million a year, and we’re not even talking about the application of customs duty, and so on... The lost tax revenue is an issue that needs to be addressed,” he says.


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