Gerry Harvey slams GST avoiders, but concedes new tax may be hard to enforce

Harvey Norman chairman Gerry Harvey says the idea international businesses are skirting new GST laws is “confusing”, but concedes it may be difficult to enforce a tax on low-value imports.

Earlier this week SmartCompany revealed there is growing concern some international retailers appear to be non-compliant with a new sales tax on imports valued at less than $1,000.

It came after listed online retailer Kogan.com blamed “widespread non-compliance” with low-value GST on a recent dip in sales.

Harvey, who was a high profile advocate for the reforms, arguing they would level the playing field for local retailers already collecting GST, says regulators need to step in.

“If you go out and do things like that you can go to jail,” he tells SmartCompany.

“If the tax office went onto me because I wasn’t charging GST I’d go to jail … it’s against the law.”

However, Harvey concedes it may be difficult for the Australian Taxation Office (ATO) to enforce the changes.

“The tax office here will have some great difficulty trying to do much with them,” he says.

An ATO spokesperson told SmartCompany earlier this week it was following up with some businesses that haven’t registered to collect GST under the changes.

The reforms were subject to widespread criticism prior to their implementation earlier this year, with critics arguing low compliance rates would persist.

Online retailer eBay, which was critical of the changes, cited treasury modelling during consultation which found compliance rates with low-value GST on imports would be as low as 25%.

University of NSW tax academic Kathrin Bain was also critical of the changes, but told SmartCompany earlier this week the ATO had to be given time to enforce the law.

“When it was first proposed the ATO at that point didn’t have figures on how many companies it would impact,” she says.

“In some ways, we need to give the ATO some time though.”

Figures are due out later this month which will shed some light on how successful the scheme has been so far.

Australian Retailers Association (ARA) executive director Russell Zimmerman says data will be watched closely by the industry.

We didn’t think the low-value threshold, the way it was designed, was going to be successful,” he told SmartCompany earlier this week.

“Something needed to be done.”

NOW READ: SmartCompany explainer: What are the new GST changes for online purchases, and how will they affect you?

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