National tax white paper to investigate international loophole
National tax white paper to investigate international loophole Candyce Braithwaite

Overseas online shopping loophole investigated

THE Federal Government will investigate closing a loophole on products sold online by international retailers to help stop Australian retail jobs being undermined by the tax exemption.

Newly appointed to the ministry, Assistant Treasurer Josh Frydenberg said the issue would be examined as part of the national tax white paper next year.

The current tax laws allow goods bought online from overseas retailers an exemption from GST if they cost less than $1000, which covers many small goods bought over the internet.

As Australians flocked to the traditional department stores on Boxing Day, spending an expected $2 billion in one day nationally, an end of the loophole could bolster the ailing bricks and mortar retail sector.

Lobby groups including the Australian National Retail Association have argued the tax exemption has undermined retail profits and local jobs, benefiting overseas companies.

Mr Frydenberg told The Australian he believed local retailers were working "with one hand tied behind their backs" due to the loophole.

He said more retail sales were now taking place online, and he did not want to see a "hollowing out" of the domestic retail industry.

While Treasurer Joe Hockey has previously indicated the tax white paper would not examine widening or increasing the GST, partly due to the unlikely prospect of states agreeing to changes, closing the online exemptions would likely get wider political support.