Treasury officials have admitted the Turnbull government’s push to impose the goods and services tax on all online goods imported to Australia is in breach of its own best-practice requirements.

They say that when the former treasurer Joe Hockey announced the plan in August 2015 he had not completed a regulatory impact statement.

Australian Taxation Office officials have also conceded the government’s plan to force overseas websites to collect GST on goods imported to Australia would be difficult to police. They say consumers will have no way of knowing if GST charged on items they bought from overseas will ever return to Australia.

Their evidence will provide ammunition to the internet giants Amazon, eBay, and Alibaba, who do not want the government’s GST bill to proceed.

The stinging evidence was heard at a Senate inquiry in Melbourne on Friday. The treasurer, Scott Morrison, is pushing ahead with plans to impose the 10% GST on all online goods purchased from overseas.

At the moment, imports of goods worth less than $1,000 are GST-free but the government wants to abolish the concession. It comes after years of heavy lobbying from local retail giants such as Gerry Harvey.

Under the plan, the Coalition wants to use a so-called “vendor model” to force companies such as Amazon and eBay to collect the GST on online goods imported to Australia.

But Marisa Purvis-Smith, the head of Treasury’s individuals and indirect tax division, says the plan is in breach of the government’s best-practice requirements. She told senators the government had chosen the “vendor model” without subjecting it to a regulatory impact statement. “Up on the Office of Best Practice Regulation website, Treasury is found to be in breach of the regulation guidelines,” Purvis-Smith said.

It prompted Labor senator Chris Ketter to ask: “So the Senate is going to be asked to vote on a bill which doesn’t comply with the government’s regulatory guidelines. Has that happened before?



Purvis-Smith replied: “I would need to take that on notice, Senator.” She also said if Australia introduced the vendor registration model in July it would be the first country in the world to do so.

Switzerland has legislated a vendor model but it will not come into effect until the beginning of 2018.

Amazon has already attacked the Turnbull government’s plan, saying it is so poorly designed it will create an “inherent disincentive” to comply. It said the government should be asking Australia Post to collect GST on goods imported to Australia but Australia Post says that would render its parcels business “unviable”.

On Friday ATO officials said they had compiled a list of 3,000 overseas companies that would need to register with Australia’s government to collect GST on the government’s behalf.

But they said the US and Chinese governments would be under no obligation to force companies operating within their borders to comply with the Australian government’s wishes.

The deputy ATO commissioner Timothy Dyce said he believed most organisations that had an obligation to comply with the legislation would do so.

Ketter asked: “Can you just tell me what’s led you to that belief?”

Dyce replied: “The model that’s been proposed, they’re predominantly large organisations that have a history globally of complying with obligations that they’re required to comply with.”