By Claire Reilly
Harvey Norman’s managing director has criticised the Federal Government for “not closing the tax loophole” that allows consumers to purchase goods from overseas valued under $1000, without paying GST.
Speaking to The Australian newspaper, Katie Page, who is married to Harvey Norman founder Gerry Harvey, also criticised the online retailers who were benefiting from the $1000 low value import GST threshold.
“You can get things shipped in from overseas and not pay GST, not pay compliance tax and not pay company tax,” said Page. “International online retailers are getting away with no contribution to the Australian economy.”
“We have to get this in perspective. Governments are losing a lot of tax by not closing the tax loophole.”
But Page was not totally against online retail, saying it was “the evolution” of the traditional bricks-and-mortar model. She also came out in defence of Australian retailers, who she said were being unfairly criticised for not being quicker to jump on the online bandwagon.
“The retail industry employs 1.2 million people – it is the biggest employer outside the public service,” she said. “Yet we are treated badly. We are viewed as Luddites as we have not embraced online shopping.
“Online retail is the evolution of the business of physical stores.”
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Page’s comments today are curious, considering Harvey Norman’s recent forays into the online world. While the company went live with its e-commerce venture in November, it also quietly launched a direct import website just three days before Christmas last year.
On the Harvey Norman Direct Import website, the company expressly states that prices on products are “exclusive of applicable taxes”. As the products are shipped from Harvey Norman Ireland, GST is not included in the sale price. In addition, because the website only sells games for consoles such as Xbox and Playstation, prices are well below the $1000 low value import threshold – and thus fall through the “loophole” that Page described.
The website’s Terms of Use state that “Taxes may be levied…by any one or more of the tax or customs authorities in Australia , the United Kingdom and Republic of Ireland.
“You will be the importer of the goods for the purpose of customs and border processing and, as the importer of the goods, you are liable to pay such Taxes to the relevant authority in addition to your payment to HNI [Harvey Norman Ireland]."
However, these terms also state that it is the consumer's "responsibility to determine" whether any taxes would apply in either Australia, Ireland or the United Kingdom.