The Australian Taxation Office is anticipating ‘willing (voluntary) participation’ from offshore retailers required to collect GST on sales of Low Value Imported Goods (LVIG) from July 1.
With that date only a matter of weeks away, and no public announcements from government or the ATO forthcoming, PhotoCounter forwarded a series of questions to the ATO’s Media Unit seeking details on progress to date in preparing for the new legislation.
1. What the ATO is doing to proactively inform overseas retailers and electronic distribution platforms about their obligations if they wish to continue selling into Australia?
2.While there are instructions on the ATO website, how will the ATO bring overseas retailers’ attention to these forthcoming obligations to register for GST payments?
3. In formal submissions last year Ebay indicated it might prevent Australians from using its platform for overseas purchases, while Amazon hinted at simply not acknowledging its new obligations. Has there been any progress in getting commitment from large EDPs in particular to conform to the ATO’s requirements to collect GST on behalf of its retailer/clients?
4. What penalties can the ATO impose if overseas retailers do not comply with the new legislation?
While the response was prompt, it was in the form of the ATO’s six-month-old submission to the Productivity Commission’s review of Collection Models for GST on Low Value Imported Goods with an accompanying observation that ‘I believe that this covers all of your questions.’
Well, kind of. The ATO submission did provide some useful details, however:
‘Take one step forward’
It’s not surprising that the ATO is taking a soft touch approach given its lack of direct leverage over offshore retailers. Frankly, it doesn’t really have any more robust alternatives.
The submission states that the ATO has been on the case since the legislation received royal assent on June 26 last year. (This is interesting to those who have followed this issue closely. The ATO has only been working on this since June 26 last year, but the legislation was initially to be implemented on July 1 last year. Well if that’s the case, someone has been having a lend of us.)
The ATO has identified ‘up to 3000 businesses that may be required ton register’ and claims it has been:
– Communicating with its client base (those offshore businesses) so that they understand their obligations;
– Developing guidance products to make it easy for clients to understand their obligations; – Providing clients with an electronic interface which makes it easy for them to register for GST as well as pay and report their GST liabilities.
Prepare to be aware
The ATO says its is producing ‘products like media releases, website guidance and social media communications ‘that cater for our overseas client base’ (although no examples were provided). It says it is working with an external PR agency to further its international reach.
‘More directly, all our potential registrants will be contacted by the ATO to inform them of their obligation…We will also provide targeted face-to-face engagement activities with international businesses…in key jurisdictions.’
There’s a webcast to come, and the ATO has developed a ‘range of general advice products’. Hell, they’ll even help with ‘converting amounts into Australian dollars.’
From the ATO, here to help
In addition, Client Relationship Managers will be appointed ‘to the largest, most influential businesses, electronic distribution platforms [eg; Amazon, Ebay] and re-deliverers to offer direct assistance.’
The ATO says it has been ‘encouraged by the willingness of businesses, tax professionals and others to engage with us in a constructive way’.
But what about those who haven’t shown such a constructive attitude to charging Australian residents GST and sending it off to the Australian Treasury? Well in that case ‘more traditional compliance activities will be based on a risk assessment of the situation, and will be proportionate to the degree of risk involved.’
– ‘Degree of risk involved’ could be translated from ATO-ese to ‘amount of money involved’, so it sounds like the ATO will be ignoring the minnows in the grey market and focussing on the bigger players such as in the photographic market B&H, Adorama and Digital Rev, etc, and EBay and Amazon on the electronic distribution platform side of things.
And if the ATO’s new ‘international clients’ are really recalcitrant, the big guns are at the ready: ‘Where appropriate, the ATO Commissioner has the power to register a non-resident and to issue default assessments.’
(But you’ve got to wonder how much an ATO default assessment with no viable options for enforcement will concern a retailer located in a back street in Hong Kong.)
Other measures include establishing ‘enhanced data matching capabilities with the Department of Immigration and Border Protection in relation to importations of low value goods.’
The ATO expressed supreme – one might even say hubristic – confidence in its ability to make the LVIG program work: ‘Many non-residents have been required to register for and account for GST since it commenced in 2000. We have well-established processes for identification, communication and monitoring of these taxpayers across obligations such as registration, reporting and payment. These…will continue to be utilised for the foreign businesses affected by this legislation.’
– This would inspire more confidence if retailers currently rorting the GST-free system – low hanging fruit, so to speak – were currently being brought to book.
The good news is that the ATO wants you to report instances of non-compliance ‘through the established online ATO process.’ The bad news is that you are unlikely to find the established online ATO process, buried deep as it is on the ATO website. But trumping that, the better news is that PhotoCounter has found it: https://www.ato.gov.au/About-ATO/About-us/Contact-us/Report-fraud,-tax-evasion,-a-planning-scheme-or-unpaid-super/#Reporttaxevasion