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Discogs and GST


Guest deanB

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Guest deanB

An email from Discogs just crashed into my inbox-

Hi DeanoBravo,

We wanted to take a moment to let you know about the new Australian GST Tax Law, which came into effect on July 1, 2018 and is now live in the Discogs Marketplace. This will affect Buyers in Australia who are making purchases to Sellers outside Australia.

Here's a quick summary of what this means for you:

  • A 10% tax will be added to the value of the order and paid for by the Buyer.
  • Discogs will supply the Buyer with required information where GST is collected.
  • This will not affect orders where both Buyer and Seller are located in Australia.

Please take a moment to view the details of this new Australian GST Tax Law so that you are prepared when placing an order to a Seller outside of Australia.

Sincerely, 
Discogs

 

Jesus wept, even secondhand goods from overseas are subject to a domestic tax.

Has this change in GST collection been brought in to offset the revenue that will be lost when the corporate tax cut bill is passed?

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I don't mind paying GST on anything I buy overseas, provided the local rate of GST/VAT is deducted where this is the law for exported goods - ie UK and the Netherlands.

 

However, in my experience, many companies in the UK don't deduct VAT (17.5%) unless prompted or at all, so we may now end up being taxed twice.

 

The fact that eBay and Discogs can handle GST at source proves conclusively that Amazon's move to restrict sales to its Australian offerings is nothing more than an attempt to bolster its Australian operations.

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My gut feel is Amazon has been told by the Fed gov to come in steep price wise for local sales until well established, then they will unleash it.

 

Amazon is spending mega bux setting up here in both CAPEX and OPEX as well as creating many jobs. Thats what our fed gov wants.

 

I work for a supplier to Amazon so I see some of the internal workings but dont take my post as gospel 

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29 minutes ago, Tasebass said:

So are we being taxed on Second hand goods too....??

It isn't correct to assume that GST doesn't apply to secondhand goods.  For example, I quite often buy collectables for a Canberra auction house called allbids (allbids.com.au).  GST is included in the winning price, although the goods are obviously secondhand.   This is because allbids is a GST-registered business with a turnover of over $75,000 a year and the goods are not otherwise exempt from GST.

 

OTOH, Aurealis doesn't charge GST, presumably because its annual turnover is less than $75,000 and it is not required to be registered for GST.

 

GST rules are very complex and large companies usually have one or two people whose whole job is to manage GST obligations and payments.

 

The situation applying to eBay and Discogs is interesting, because ostensibly you are dealing with individual sellers under the eBay etc umbrella.  However the interpretation under GST law is obviously that the relationship goes further than eBay or Discogs merely acting at arms-length as a marketplace for a fee from the seller.

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1 hour ago, bronal said:

I don't mind paying GST on anything I buy overseas, provided the local rate of GST/VAT is deducted where this is the law for exported goods - ie UK and the Netherlands.

 

However, in my experience, many companies in the UK don't deduct VAT (17.5%) unless prompted or at all, so we may now end up being taxed twice.

 

The fact that eBay and Discogs can handle GST at source proves conclusively that Amazon's move to restrict sales to its Australian offerings is nothing more than an attempt to bolster its Australian operations.

 VAT in the UK is 20%.

 

 Amazon can handle GST easily.  the collect GST for the UK, Canada and Singapore to name a few.   they are just being corporate diccks.

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1 hour ago, Tasebass said:

So are we being taxed on Second hand goods too....??

Yes, the GST has always applied to second hand good, if the seller is required to pay the GST (over $75k sales) .... the platform operator is considered the seller in this case.

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Guest deanB

I did a trial order with Banzai Music, Germany. They automatically remove the 19% vat, no mention of 10% Australian GST in final checkout price.

What would compel an overseas business to comply with this regime and would it add to their admin costs in doing so?

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7 minutes ago, Alex32 said:

But how do we know that the sellers on Discogs are generating more then $75k in sales a year?

 

Its not up to individual sellers on Discogs.  As a entity Discogs collect will their fees and the GST for every sale.   Discogs do well over 75k to AU per year.

  I wonder how the Aust govt audit these overseas companies thou.

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10 minutes ago, deanB said:

I did a trial order with Banzai Music, Germany. They automatically remove the 19% vat, no mention of 10% Australian GST in final checkout price.

What would compel an overseas business to comply with this regime and would it add to their admin costs in doing so?

No more than a relatively simple system amendment and remittance twice a year I would think.

Edited by bronal
Typo
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1 minute ago, metal beat said:

 

  I wonder how the Aust govt audit these overseas companies thou.

    "Hello Mr Discogs I'm an Aussie accountant can I have a look at your books please"......:lol:

You've got laugh its that complicated...

Tase

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17 minutes ago, Black Label said:

Ok, so please excuse my ignorance but if Discogs must charge GST on overseas sales why shouldn't this also apply to local sales? Same for eBay too?

........:popcorn:.....

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GST is chargeable to any item that has not been the subject of end of sale within Australia. That means that anything that has not had either sales tax or GST collected on it previously is subject to the tax. Second hand goods from overseas have never had a local tax applied to them, they are new to Australia and therefore subject to tax. Any company that offers a service to enable sales of second hand goods, such as discogs and ebay, must charge GST on the service they offer. All transactions through these companies, regardless of where the sale was made, or the location of the company, is deemed to be a transaction from within Australia and subject to tax. Companies turning over more than $75 000 per annum do NOT have to charge GST for a second hand sale of goods within Australia if the goods have been the subject of end of sale taxation previously. They DO have to charge GST on the component made up of their service charge. 

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52 minutes ago, deanB said:

What would compel an overseas business to comply with this regime

Tax treaties between Australia and their country

 

51 minutes ago, metal beat said:

 I wonder how the Aust govt audit these overseas companies thou.

They don't (directly or officially), but they could be by the authorities in their own country.

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2 minutes ago, t_mike said:

GST is chargeable to any item that has not been the subject of end of sale within Australia. That means that anything that has not had either sales tax or GST collected on it previously is subject to the tax. Second hand goods from overseas have never had a local tax applied to them, they are new to Australia and therefore subject to tax. Any company that offers a service to enable sales of second hand goods, such as discogs and ebay, must charge GST on the service they offer. All transactions through these companies, regardless of where the sale was made, or the location of the company, is deemed to be a transaction from within Australia and subject to tax. Companies turning over more than $75 000 per annum do NOT have to charge GST for a second hand sale of goods within Australia if the goods have been the subject of end of sale taxation previously. They DO have to charge GST on the component made up of their service charge. 

Thank you for the explanation.


I had a Discogs, Amazon, eBay, etc splurge the past few months as I knew this would be coming. Will for the time being be turning off the taps on this discretionary spending as emotionally i'm rather pissed at these developments, even if there's an equitable, rational argument to be made for it.
And though it won't matter one iota I will forever refrain from purchasing goods from Harvey Norman in response to Gerry's public lobbying.
Grumble, grumble...

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Just now, Tasebass said:

...Huh??

...and we benefit ..???

Sure, we benefit.

 

We ask the foreign entities to collect tax on our behalf.    How would we enforce this? ......  the answer is WE wouldn't, because we have no jurisdiction.    Most countries have signed up to a tax treaty with Australia, where they have agreed to enforce this tax collection using their OWN laws.

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Guest deanB
15 minutes ago, Tasebass said:

Fooook me...if that aint a can o worms....

A cd sold new in Australia (gst paid) is sold secondhand to an overseas discogger. Down the track, that same cd is listed on Discogs and purchased by an Australian discogger, gst added again. 

 

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9 minutes ago, davewantsmoore said:

Sure, we benefit.

 

We ask the foreign entities to collect tax on our behalf.    How would we enforce this? ......  the answer is WE wouldn't, because we have no jurisdiction.    Most countries have signed up to a tax treaty with Australia, where they have agreed to enforce this tax collection using their OWN laws.

Oh.....bit like free trade agreements....:lol:

....really beneficial to Aus at the end of the day...

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