Govt eyes Netflix with GST

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The government plans to introduce GST to overseas entertainment companies including Netflix and Apple, according to media reports.

It follows Netflix launching with an $8.99 monthly subscription, below its Australian-based competition including Stan and Presto.

“The states agreed in principle that we should move in that regard,” Treasurer Joe Hockey said yesterday, following a meeting with state treasurers.

“I have offered to work as quickly as possible with them to introduce legislation to address that.”

Source: The Australian

10 Comments:

  1. I laughed at this, especially after this weeks ‘affairs’ lets get people to pay more tax…but lets not dare even release the names of companies who aren’t good ‘tax citizens’.

    Anyway, actually looking at trying netflix out however, what’s their policy on updating the library? I.e. some of their still-running shows, what will be the delay in the episodes being available i.e homeland?

  2. veronicadeedee

    The “Netflix” tax is likely to be part of next month’s federal budget. Australian Communications Minister said, “The Copyright Act does not make it illegal to use a VPN to access overseas content”. So like before I will use a VPN service like PureVPN, hma, hola etc to access Netflix. It wont track my ip so no tax!

  3. You go to the Netflix site, it is Netflix Australia – you absolutely should be paying GST – you are “buying” from an Australian site (or branch of the company) and using it in Australia. Netflix as a company can chose to absorb or pass it on – its only 10% so less than a dollar!

  4. Perhaps if the Federal government wants ISPs to dob in pirates then perhaps they could get credit card companies and banks to collect the GST for all these offshore companies. And I think Netflix Australia is actually an Irish company! The further problem is that the US is quite happy for these companies to evade tax outside of the USA but not within it and will be doing its best to thwart any control of American multinationals.

  5. When Howard and Costello wrote the GST laws they left some massive holes. I buy travel insurance for a coach tour of Australia, GST is payable. I buy insurance for a coach tour of Europe, from and Australian company, no GST is payable. I buy contact lens from an Australian company’s “Singapore office” online. No GST is payable. Same lens at OPSM, GST is payable. If it’s purchased for consumption in Australia, be it Netflix or contact lens, GST should be payable. But good luck trying to collect it, Joe.

    • In all fairness when the GST was introduced eBay was in its intensify, online shopping wasn’t used by many here in Australia. While I agree some of these loopholes need to be closed I just hope it doesn’t kill off online services like Netflix. The irony is they want more people to pay for shows that some are currently getting else where and a new tax like this could see some deciding its worth the risk.

    • Items under $1000 that are imported are not liable for GST. It was a small number of purchases at the time and enforcing it would cost more than it raised (and still would because Customs and Australia Post’s infrastructure are from the 1980s).

      The Government will have to impose the GST on Neflix etc. because they are competing directly with companies operating in Australia and will put them out of business and damage the government revenue otherwise.

  6. How the heck are they going to enforce that? Netflix is an US company, and therefore not subject to the laws of Australia. Much the same as Google selling their Nexus phones from Google Singapore to get around paying GST on a phone.

  7. So just as its streaming services takes off in this country the government wants to tax them, good move?

    BTW doesn’t music/movies sold at the Apple Music Store already attract the GST?

    • Yup, Australian iTunes & App store purchases are GST-inclusive.

      The ‘loophole’, if it is that, is that they’re structured essentially as consignment stores. End result is that Apple isn’t responsible for paying the GST collected to the ATO – they pass the price paid, less their 30% cut, to the actual seller (e.g. Sony Music Aust., Universal Music Aust, the app developer, etc.) who is then responsible for it.

      (Those of you who are indie musicians / developers with stuff in the iTunes store – check your monthly reports in iTunes Connect.)

      I believe Google Play is the same / similar, with the added loophole that it’s much easier for the end-user to choose a non-Aus store & avoid paying GST altogether.

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