The Federal Government says overseas companies will only be collecting GST for online purchases on a voluntary basis, but that the major retailers will be willing to comply with the new laws.
The proposal to add a 10 percent goods and services tax to all online purchases from overseas has been, with local retailers saying reform was needed to ensure an 'even playing field.' Last month, the to bring the GST to all online purchases from overseas. Previously, the tax only applied to overseas purchases over AU$1,000.
Today, Treasurer Joe Hockey said the collection of taxes from overseas companies could be a "challenge" but that it was a well established practice internationally.
"There are companies like Amazon and Facebook and others that are prepared to work with countries wherever they may be located to apply consumption taxes, should that country request it," he said. "That is because they don't pay the tax themselves, it's their customers that pay the tax.
"So I am absolutely confident...those sorts of companies will work with the tax office to apply GST to their sales in Australia, because they're doing it other countries around the world. And that is because they want to be good global corporate citizens."
However, while big companies might comply with local laws, Commissioner of Taxation Chris Jordan indicated the collection of GST could not be enforced.
"All the large suppliers do comply with domestic laws," he said. "It is more or less on a voluntary basis, but they do wish to be seen to be complying with local laws. And that is the vast bulk of sales in terms of percentages."
But while shoppers may be met with a 10 percent price hike when they shop from larger online retailers such as Amazon or Asos, the Commissioner's comments revealed that smaller sellers may still be able to dodge the duty of tax collector.
"There's a multitude of small suppliers," Commissioner Jordan said. "Let's wait and see how that turns out, wait and see the size of that and work out if there are some other measures that might be feasibly introduced to pick up on more of those."
The GST legislation is expected to be introduced to Parliament in the next sitting fortnight.