The real cost of the big retailers push for GST on retail imports

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There's plenty of press around the big retailers push for changes to the GST exemption on imported goods valued at less than $1000.

There are further aspects which I think have been overlooked so far, particularly in terms of implementation.

Currently if a consumer purchases an item that exceeds the $1000 GST exempt threshold they are required to make an Import Declaration (PDF) to Customs and Border Protection using form N10. This form can be submitted via email, fax, post or in person. Additionally there is a processing charge (PDF) imposed by Customs. This varies from $40.20 to $65.75 based on mode of arrival (sea/air) and form submission method (electronic, manual).

Aside from the time penalty of filling in & submitting the Import Declaration form the Customs processing time for such declarations is 5 business days, and up to a further 3 days for payment processing.

So really what the big retailers are seeking is not simply an increase in cost to the consumer of 10% GST; they also seek to introduce inconvenience to the internet retailing experience, and a minimum additional cost of $40.20 on top of the GST.

As an example my most regular online purchases are from Book Depository (UK & US), with an average price of around AU$15. These are typically delivered to me within a week. That would blow out to 2-3 weeks, and cost me $55 in total.

Customs could perhaps drop the need for an Import Declaration and simply send an invoice for the required GST based on the vendor's declared value, though I don't know if this would be legally valid. However there would still be significant labour involved in this process given the wide variance in packaging & labelling so I expect the processing fee would not drop significantly, nor the processing time. Keep in mind that every second that your package is held up in Customs means it needs to be inventoried and warehoused, and once payment of the GST is received the package needs to be searched for and shipped. Even the most efficient online retailers (i.e. Amazon) do this process manually today so there is no reason to believe that Customs could do it any better.

Would an additional 2 week wait for your online purchases encourage you to visit your local retailer?

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This page contains a single entry by goosmurf published on January 5, 2011 12:18 PM.

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