The Australian Retailers Association has described as “necessary and overdue” the government decision to remove the exemption from GST (Australia’s Goods and Services Tax) for online sales from foreign companies.

The Federal government and all Australian States and Territories have now agreed to the removal of the GST threshold for online overseas purchases.

Currently, online purchases from outside Australia are not required to pay GST unless the value of the product exceeds $1000. From 1 July 2017, a “zero threshold” will replace the $1000 threshold. This means the tax will apply to all products and services sold from overseas vendors into Australia regardless of their price.

“This will deliver competitive neutrality for Australian businesses – it will ensure that there is a fair and equal treatment of all goods and services,” said Federal Treasurer Joe Hockey.

The decision follows an in-principle agreement of the Council of Australian Governments’ meeting in July 2015 to reduce the current $1000 Low Value Threshold.

Hockey stated that only foreign companies with an annual GST turnover of $75,000 or more would be affected, and that there was scope for the change to come in earlier than the July 2017 date. It was unclear how the government intends to monitor whether an overseas vendor has an annual turnover of greater than AUD$75,000 or what practical hold-ups would prevent earlier implementation than the 1 July 2017 date.

The government has not proceeded with earlier suggestions that the threshold would be reduced to $20.

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