5 Of Your Favourite Things Are About To Get More Expensive
A great big new tax on ... intangibles?
Hey guys THE BUDGET IS NEXT WEEK. And the government has a few interesting things planned.
One of those things will (probably) be a tax on ~intangibles.~
Fairfax reports that Assistant Treasurer Josh Frydenberg has successfully convinced cabinet to introduce the Goods and Services Tax (GST) on overseas services, also known as 'intangibles' that are paid for in Australia.
So, what's an intangible? Well, it's kind of hard to say - what with them being so intangible - But basically it's any service that you can pay for but can't physically hold. At the moment we don't pay GST on these things if we're buying them from overseas.
Professor Chris Evans from the University of New South Wales did his best to explain it to BuzzFeed News.
"It's quite literally anything you can't touch. So software is a classic example. If you think of any forms of property such as land, a factory or a car, you can touch all of those. In this context, it's things like software, films, intellectual property, brand names and goodwill [the inherent value in a business beyond it's assets]."
So, what are we about to pay more for?
Because Netflix is based in the US, we don't pay GST on our subscriptions. A 10% GST would likely bring the price of a subscription more into line with what we pay local streaming services like Presto and Stan.
"Netflix has been and will be compliant with all applicable laws and regulations, and we pay taxes as required under local and national law," Netflix told BuzzFeed News.
3. Movie downloads
5. Online shopping
This one is a little bit more complicated. At the moment we only pay duty on overseas purchases that cost more than $1000. So that boat you bought attracts taxes, but those boots you bought don't.
Assistant Treasurer Josh Frydenberg reportedly wants to lower that threshold to $500, but that will probably happen after the budget.
These changes would reportedly result in the 'billions' of dollars in extra revenue for the government.
The Prime Minister appears to support the idea.
Speaking this morning on 3AW, Tony Abbott said, "We want to ensure that as far as is humanly possible companies pay their tax where they make their money. So you expect more on this on budget night."
Professor Evans says it's a sensible reform.
"It creates a more level playing field. The difficulty is, if you're downloading movies and ebooks from overseas, then although the sale is effectively taking place here, it's escaping tax. And obviously, the retailers in Australia are having to compete unfairly with cheaper products from overseas."
A spokesman for Josh Frydenberg declined to comment on matters in the upcoming budget.