E-commerce the next big challenge


In NNF 2016/170, details were provided to members in relation to the Exposure Draft Legislation (Exposure Draft) as it related to tax arrangements as to goods and services, in certain supplies of low value, purchased by consumers for imports into Australia.

On 24 November 2016, the CBFCA held discussions with representatives of the Australian Taxation Office (ATO), the Treasury and the Department of Immigration and Border Protection (DIBP) as to the Exposure Draft. Of particular concern to the CBFCA was the lateness of inclusion in the process where the CBFCA may be able to provide informed comment as to what is proposed as to process implementation. It should be noted that the CBFCA, since the making of its Submission to the HVLV Enquiry in December 2013, has not been engaged in any discussions with any regulatory agency on background or any shareholder consultation leading up to the Exposure Draft. The CBFCA is also not aware of any empirical data that underpins the proposed methodology or as to how the vendor model will meet the reality test.

The CBFCA has sought access to the data as to the ATO key e-commerce vendors (noted at 500 key players) as well as to how the existing GST leakage amount had been determined. The CBFCA is also aware that the work in 2005, by the then Australian Customs Service (noted in documentation that had been published as result of a Freedom of Information request), was, in the CBFCA’s opinion, flawed as to its perception of e-commerce take up, revenue leakage, process management and the then recommendation to Government.

The CBFCA raised, but did not necessarily receive any informed response, on issues relating to:
  • Segment of markets noting the vendor(s) operating within those markets
  • Competitive neutrality between entities operating as 'goods forwarders'
  • How the ATO determined the average customs value of $200 in relation to the 34.9 million transactions and as to whether that average determination includes Australia Post express mail service (EMS) consignments. It was advised the valuation determination was verified from the consignment note and not of any contract (invoice) documentation between the buyer and the seller.

The focus of the discussion was as to GST and tax anti-avoidance provision with little (if any) reference across to the dual requirement of the DIBP as to its requirements on;
-   False statements
-   Import prohibitions and restrictions
-   Community protection aspects
-   Strict liability offences
-   Reporting criteria based upon individual customs broker licence conditions
-   Deemed owner of the goods under Section 4 of the Customs Act
-   Reporting requirements

  • Methodology of reporting and clearance of goods under the $1000 customs value threshold and, in particular, the liability of ‘goods forwarders’ where the vendor is not registered and as to issues relating to the carriage of those goods which creates a liability for that ‘goods forwarder’.
  • Cost recovery, noting the cross subsidisation to the Import Processing Charge and methodology to correct same.

While the CBFCA noted that, in the main, the draft legislation would impact on those entities that are closely linked in to the carriage of e-commerce generated consignments (whether that be a postal authority or an international express carrier), CBFCA members do have clients that operate in the proposed new environment.

It was therefore imperative for the CBFCA and its members to ensure that the proposed process did not conflict with other requirements in terms of regulatory compliance, and that equity exists in treatment in relation to those who participate in the business to consumer e-commerce sale process.

The CBFCA, in its discussions as to the draft legislation, sees significant problems in what is to be achieved and how service providers in an e-commerce market will seek to ensure the most cost-effective and cost-efficient ways as to the continuation of the distribution of their products.

From a stakeholder point of view, the CBFCA would have expected that it, and other not-for-profit industry associations representing service providers in international trade logistics and supply chain management, to have had early engagement in discussions with the respective regulatory agencies as to the vendor model and/or other ways and means to ensure the collection of GST related to e-commerce sales imported into Australia. Unfortunately with the commencement date on 1 July 2017 and legislation to be introduced into the Parliament in early 2017, this consultation has not occurred.

Perhaps the reference below would have been a model that could have been employed, or for the future employed, to address the global rise in e-commerce.

CBP Establishes New E-Commerce and Small Business Team to Handle Global Rise in E-Commerce