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Email from ebay about the 'Netflix Tax'

Discussion in 'Selling online' started by Dropbear, May 31, 2017.

  1. Dropbear

    Dropbear Member

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    Hi all, I'm an ebay seller, and I just got an email from ebay with the heading
    "Important: "Netflix Tax" effective 1st July 2017"
    it goes on to say you can find more information 'here'
    but their 'here' link in the email is broken, it just goes to the ebay home page.

    Anyway, I've read a few forum entries but none that explain it from the basics up. Most are people who already understand its basics discussing implications.

    I do not pay GST, because I only turnover 70k per year. I manage my sales to ensure I do not go over 75k per year, so I can remain GST free. (one day I will sign up but not for a few years) I already sell my items at the top of their price range, so there is no way I can pass another 10% on to the customer. Paying GST would actually mean 50% less profit for me. I only make 20% profit on my business currently. 20% of 70K is $14K Profit. If I have to pay 10% GST on my 70K revenue, I am down to 7K profit. Which is just utter crap.

    So the reason the 75k GST threshold exists, is to protect tiny businesses like mine.

    Can someone please explain to me how the Netflix tax will effect me, and any ways you know of that I can be protected?
    Thanks all!

  2. logicware

    logicware Member

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    I may be wrong, but I believe the 10% GST 'Netflix' tax will be on ebay fees. not on the value of the sold goods. so if your fees were $10 for an item. an extra 90c on top of that for the 'Netflix' GST Tax.

    but like I said, I could be wrong.

    If its on the actual value of the goods (and even itf its not), it could wipe out a few of the Chinese companies selling on ebay Australia, which could potentially be good for many of us.
  3. Dropbear

    Dropbear Member

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    I'm trying to figure out if there are any ways to get out of it, but It looks like I can't unless I am registered for GST, making this a GST expense I can account for.

    So it seems to mean that ebay is providing me a service, so I pay GST on that service now? And ebay is choosing to pass that cost on to its service users?

    Do I understand correctly?
  4. John Debrincat

    John Debrincat Well-Known Member

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    Hi @Dropbear eBay has to add the 10% GST to its fees. The "Netflix tax" which starts from July 1 basically requires GST to be added to any digital service. That includes services like eBay listings and final value fees. We have recently seen many other overseas companies doing this as well for example Google now charges GST on the Adwords fees. The GST is remitted back to the Australian Tax Office and is not retained. If you are registered for GST then you can offset the GST you pay against the GST you collect. If not then your GST just becomes an additional cost for you much the same as when you buy goods from the local store. The topic has been extensively covered in the in the eBay Sellers Australia Forum on Facebook in a post found here.

    Frankly this can only help a lot of Australian sellers on eBay and Australia as a whole by ensuring that some of the large multi-nationals have a responsibility to collect and pay taxes.

    John
  5. Dropbear

    Dropbear Member

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    Thanks for clarifying, I understand now.
    Cheers!
  6. bb1

    bb1 Renowned Member

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    I just had a look at the form where they are saying we can get exemption from the GST, but my reading of the relevant ATO page indicates that you cant be exempt. And besides if I pay the GST on the listing fee's, I can just claim it back as an input credit.

    I'm confused what Ebay wants the info for. Maybe an accountants view can clarify
  7. Dystopia

    Dystopia Member

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    I have a feeling this `GST' will have different rules to what we're used to.

    Otherwise how would it be possible for the ATO to make Australian sellers liable for paying GST on GST-exempt International postage costs, which are wrapped up in Ebay's fees?

    And how can they make sellers who are GST exempt pay GST now? I think this is not really GST at all, but a separate kind of tax the Government made up to ensure online sales are less competitive, at least on ebay.

    I'm looking on the bright side. There are other places to sell, and they are a lot more mature platforms now. I'm kind of excited really, time to get the eggs into more baskets, explore new things, get rid of that `held hostage' feeling.

    All the best to anyone else affected by this.
  8. John Debrincat

    John Debrincat Well-Known Member

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    GST (goods and services tax) is paid by everyone today it does not matter if you are GST registered or not. By having GST registration you can then claim back the GST that you pay by offsetting the GST on your sales (inputs versus outputs). Nothing changes in the rules as they apply to your business. So basically no one is exempt from paying GST but you can be exempt from the need to report it and add it to your own sales. The "Netfix Tax" will not change that at all.

    eBay now have to add GST to all their invoices that they send to their customers for the fees that they charge to customers in Australia. That is because they are delivering a service in Australia.

    There are other places that you can go and sell. If they are Australian businesses they will already be charging GST and if they are international (like eBay) they will have to now add GST.

    John
  9. Dystopia

    Dystopia Member

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    Hi John, You could be forgiven for thinking so, but Ebay seller fees are based on the digital service (provided by Ebay ) as well GST exempt Postage costs paid to Australia Post( which aren't provided by ebay). For exporters, over half their Ebay fees may be based on GST exempt Postage costs.

    So with the government adding a 10% tax on top of EBay's seller fees, they are effectively Taxing GST exempt International postage. So in that way its a different Tax to GST.

    Its also a good reason to diversify onto selling platforms that charge fees for their service only, not additional fees for services they don't provide, such delivering the post.

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