A threshold as low as $20 is being contemplated as the point where the goods and services tax could soon apply to online purchases.

While no agreement emerged to increase the GST rate or base, debate on an appropriate level for the GST to kick in has begun after state and territory ministers yesterday agreed the current tax free threshold of $1,000 should be lowered.

An agreement on the final level of the new GST threshold is now a new challenge for Treasurer Joe Hockey who needs to get agreement from state and territory leaders.

However, the Assistant Treasurer Josh Frydenberg told the ABC's AM program that a tax-free threshold as low as $20 is being seriously considered.

"Those numbers have been bandied around, particularly the $20 mark, but that's to be worked out between the [federal, state and territory] treasurers in coming weeks," he said.

That would be a significant decrease from the current tax-free threshold of $1,000 for imported goods and is likely to be opposed by online shoppers and consumer groups, but welcomed by domestic retailers.

Mr Frydenberg said that Australia is currently "an outlier" by exempting such expensive imports from consumption taxes.

"In the United Kingdom they apply the GST to goods and services bought overseas online from 15 pounds; in Canada the threshold is 20 Canadian dollars; in the United States they apply their GST or VAT equivalent to all goods bought online from overseas," Mr Frydenberg observed.

"So, at $1,000, the Australian threshold has really been out of sync with the rest of the world."

Compliance costs 'substantially reduced'

Mr Frydenberg said that when the goods and services tax was originally designed by the Howard government in the late-1990s few foresaw the explosion in online shopping that was about to come.

He said, as a result, Australian governments are missing out on hundreds of millions of dollars of GST revenue and jobs are under threat.

"There's been a broad coalition of support for this initiative from retailers and business groups, but also from unions who understand how important this is to local jobs, as well as from state leaders both Labor and Liberal," Mr Frydenberg added, indicating that some substantial reduction in the threshold is a fait acompli.

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The Assistant Treasurer said modern technology is also making it more economic for governments to collect the tax on lower value imports.

In 2011, the Productivity Commission found there to be a solid rationale for a lower threshold, but also concluded it would be uneconomic for a limit of $20, where collection costs would have been three times the tax raised.

"That report from the Productivity Commission dates back to 2011 and they also made the conclusion in that report that there was a strong principle for actually applying the GST to these online purchases and I think technology has really moved forward since those times which has substantially reduced the compliance costs," Mr Frydenberg said.