GST slips through the net

Penn said that although the Australian Customs Services monitored purchased goods as they entered the country, there was no Government mechanism for monitoring downloaded software and other virtual commercial products ordered via the net.

However, Penn said it was unlikely the prospect of avoiding the GST would encourage many Australian shoppers to take their business online. Security issues and delivery costs would be "a bigger deterrent", he said.

Penn said the New Zealand Government also suffered from the taxation loophole. "There's no mechanism (in Australia or New Zealand) for capturing GST payments to overseas organisations."

"You pay by credit card straight to the overseas organisation. There's no one in the loop to collect it (the GST)," he said.

Australian Customs, which monitors taxation on goods imported into Australia, admitted it does not currently have any system in place to monitor taxation on imported virtual goods. Accordingly, a spokesperson from the Australian Taxation Office said the GST would not be placed on virtual goods downloaded from overseas online retailers. Software sold through bricks-and-mortar retailers would nevertheless incur the GST, the spokesperson said.

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