A new tax on digital goods and services was proposed a few years back and is set to come into effect in a few weeks, at the beginning of the new financial year.
Dubbed the 'Netflix tax', ten percent of the cost of a digital service is very likely to be payable from July 1 this year.
"The absence of GST on imported digital products and services posed a headache to the Australian government for two reasons. First of all, the government missed out on tax revenue and secondly, local suppliers of content were disadvantaged compared to overseas ones. In simple terms, companies like Netflix had an advantage over local platforms like Stan. The new tax is designed to address both of those issues," Mark Chapman, H&R Block Director of Tax Communications told HuffPost Australia.
"Essentially, imported digital products and services will go up by ten percent, being the rate of GST. So for an example, an annual Netflix subscription which currently costs $107.99 ($8.99 a month) would go up to $118.60," Chapman said.
Despite being a few weeks away, this isn't all set in stone just yet. The low value imported 'goods' tax is almost certain to be deferred to 1 July 2018 -- the amendment has to go back through the House of Representatives. The services part, dubbed the 'Netflix tax', still hasn't passed through Parliament, so although it is still scheduled to start 1 July 2017, it may also be deferred to 1 July 2018.
Regardless, some online services have started to inform their uses of the impending changes. eBay Australia has sent out a series of emails detailing what the new tax will mean for users of the platform.
"The new tax will apply to fees charged by overseas online stores, like eBay who state that 'From 1 July 2017, Goods and Services Tax (GST) will apply to fees on eBay.com.au, due to new legislation in Australia (the "Netflix Tax")'," Chapman said.
"So, if you sell through eBay and you are GST registered, you won't notice the difference -- because you'll be able to reclaim the GST on the fees charged by eBay -- but if you are not GST registered, which would apply to small sellers on the platform, you won't be able to reclaim the GST and will take a ten percent additional hit on the fees you pay."
The part that is very likely to be delayed until July 1st 2018 is the tax on imported purchases under $1,000. Although it's not yet clear if this will kick in in two weeks or 12 months, it's still coming.
"The government is also introducing GST on imported goods costing less than $1000. Previously overseas suppliers did not need to charge customers GST where goods were purchased for less than $1,000. Overseas suppliers who import more than $75,000 of goods into Australia will need to register for GST and charge the tax to customers."
"This new tax is expected to raise all manner of compliance difficulties but the government argues that it will create a level playing field for Australian-based online retailers, who already need to charge GST if they pass the $75,000 turnover threshold. This tax was due to be introduced on 1 July 2017 but it now amendments in Parliament now make it very likely it will be deferred a year and will start on 1 July 2018 instead," Chapman said.
We will update this story as the laws come into effect.
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