Shadow Treasurer Chris Bowen said Labor was ready to act "constructively" with the government, and not charging the GST on imported goods under $1000 was "unfair" for local small business.

Move to tax retailers directly

Shop owners lobby group, the Australian Retailers Association, and Australia's book industry have long pushed for a zero GST threshold, to "level the playing field" for local businesses.

"This is about ending an era of protectionism for offshore businesses," Australian Booksellers Association Chief Executive Joel Becker, said.

But the option of charging GST on imports as they came across Australia's borders has been problematic because it could cost more to implement than it would raise, according to Productivity Commission advice.

Last year, however, the OECD agreed in principle that in member states foreign suppliers would have to pay sales taxes, such as GST, on online goods purchased by local consumers, giving countries such as Australia more faith in compliance.

Mr Hockey said new developments, including those made at the G20, also allow the government to identify which goods are sold to Australians.

"We have identified a new way, through Australia's leadership of the G20, to be able to impose the GST on the supplier," he said.


"We can go to the Amazons, we can go to the various retailers overseas, and say 'you have to identify the goods you are selling into the Australian market' and they will do so, and that is how we are going to collect it."

Customs, compliance still a hurdle

UNSW associate professor of taxation law Dale Boccabella said with costly customs and quarantine processes still in place, there was no simple solution.

"The problem is at the border you will still have to distinguish between goods coming in as tax-paid items and the non-tax-paid items," he said.

He said while other international examples show larger companies are likely to comply with Australia's GST for reputation reasons, smaller companies may try to dodge the net, creating distortions as consumers opt for these cheaper goods.

"You are going to need a lot of co-operation with foreign suppliers because under our current common law foreign court systems will generally not enforce our tax law for us," Mr Boccabella said.

He said Australia could find ways to encourage compliance, however.

"We could say 'we are not going to streamline your goods through customs unless you comply with our GST system' and that might be a little bit of leverage," he said.

There is also the issue of taxing "intangibles" such as digital downloads, currently not caught in the taxation system.

Mr Bowen said he would be seeking a briefing on the latest Treasury advice.