Australian leaders give the green light to apply GST to online purchases under $1,000 Australia's State and Commonwealth leaders have agreed to extend the goods and services tax (GST) to include goods and services purchased online valued under AUD $1,000. There has been significant opposition to this proposal, particularly in light of a 2011 Productivity Commission inquiry which found that lowering the GST-free threshold for goods and services purchased online to $20 would cost more than $2 billion per year to Australian businesses, while only generating approximately $550 million in revenue. However, a Commonwealth Parliament research paper (published October 2014) concluded the GSTfree threshold influences consumer choices to the extent that it distorts competition between Australian and international retailers, giving international retailers a competitive advantage over Australian retailers, and in its white paper on tax reform published in March 2015, the Commonwealth Government indicated that a decision to reduce the GST-free threshold would be possible with mutual agreement between the State and Territory governments. Assistant Commonwealth Treasurer Josh Frydenberg stated that Australia has been an "outlier" when compared to some of its key retail trading partners. For instance, the UK applies its equivalent goods and services tax to online purchases from 15 pounds, while majority of states in the US apply an equivalent sales or use tax to taxable goods purchased online from overseas (which, however, applies only to in-state buyers or sellers with nexus to the U.S. state). The Assistant Treasurer also emphasised the fact that a decision to reduce the GST-free threshold for online sales has the support of the Australian National Retail Association and the Shop, Distributive & Allied Employees Association. The in-principle agreement by State and Commonwealth leaders to reduce the GST-free threshold for online sales has been placed on the agenda for the upcoming Australian Leaders Retreat (to be held on 21 August 2015), where the leaders will progress the initiative in more detail. For more information, please contact Anne-Marie Allgrove, Toby Patten, Jarrod Bayliss-McCulloch or Grace Loukides.