What the proposed new “Netflix Tax” will mean for you

The Federal Government has introduced draft laws – dubbed the “Netflix Tax” – that will add a 10 per cent GST on digital content obtained from overseas like movies, music and e-books.

The bill was formally introduced in parliament today by Treasurer Scott Morrison after being originally proposed last year.

Mr Morrison said the bill would “level the playing field” for Australian companies.

This means any content obtained from another country like digital music, movies, e-books and software will attract a 10 per cent Goods and Services Tax.

And the tax will be added to subscription video on demand services like Netflix (which is an American company), downloads from Amazon like Kindle e-books and other music subscription services.

At present if a customer were to obtain content or software from an Australian company they would have to add a 10 per cent GST which would often drive them to make the same purchase GST free from an overseas company.

“This ensures Australian businesses selling digital products and services are not disadvantaged relative to overseas businesses that sell equivalent products in Australia,” Mr Morrison said.

“For example, current laws discriminate between a software subscription service provided by a local supplier which attracts a GST but a similar software subscription service provided by an offshore supplier may not, creating a competitive advantage for overseas companies.

“The legislation will apply the GST to all digital supply provided from offshore, and thus, level the playing field for Australian businesses.

“Overseas vendors … often multinationals selling digital products or other services such as apps, downloads of digital content, movies, will be required to register, elect and remit GST on their sales to Australian consumers.”

The “Netflix Tax” is expected to generate about $350m over four years and, if it is passed, will begin on July 1, 2017.