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Netflix prices are going up: What the 'Netflix Tax' means for you

Prices for streaming, apps and downloads are going up 10 percent from July 1 -- but for Netflix, the changes could cost you as much as $18 a month.

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Claire Reilly/CNET

Australia, you've been having it too good for too long, with your low-cost internet purchases. The government was bound to make some changes eventually.

And that time has come. On July 1, 2017, the government's so-called "Netflix Tax" is going to change the way you pay for content online, bringing GST to online products like streaming services, movie downloads, games and software.

"Tax reform!" you say? Yeah I know, it's a bummer. But stay with me here -- we've read up on the fine print so you don't have to. Here's what the Netflix Tax means for you.

The big takeaway? Netflix prices are going up. And by more than 10 percent. 

The lowdown on the 'Netflix Tax'

From July 1, every time you download or stream something online from an overseas provider, you'll be charged the 10 percent goods and services tax.

The Netflix Tax (yes, even the government calls it that now) was announced as part of the 2015-16 budget -- so named because it affects online services and downloads.  

Some sellers (such as Adobe) have already been charging GST on local purchases -- nothing will change here. But the reason this is a big deal is because some overseas sellers haven't been charging GST, so if you've been buying in foreign or converted currency without the tax being levied, get ready to see a price rise.

It's not just Netflix that will go up in price. Think apps and episodes on Google Play, Steam downloads, Battle.Net downloads -- all these "intangible goods" are set for a 10 percent bump.

Which prices are going up?

Netflix -- Going up

Netflix will now charge you as much as AU$18 a month for its top-tier service. Prices will go up for new customers from today, and existing customers will get 30 days' notice.

The streaming company is meeting the new 10 percent GST requirements, but it's also taking the opportunity to increase prices on top of that. Netflix says it hasn't lifted prices since launching locally in 2015, but the new changes are all about prices reflecting quality.

"From time to time, Netflix plans and pricing are adjusted as we add more exclusive TV shows and movies, introduce new product features and improve the overall Netflix experience," a Netflix spokesperson said. "We also adjust plans and pricing to respond to local market changes, such as tax or regulatory changes."

It's not the first time the company has upped prices -- it hiked prices in the US in 2015, and the company has even tinkered with the prices new customers see in Australia. But now these changes are here to stay for Aussies. 

Here's what you'll be paying on your next bill:

Plan

Old Price

New Price

% Increase

Basic

AU$8.99

AU$9.99

11.1%

Standard

AU$11.99

AU$13.99

16.7%

Premium

AU$14.99

AU$17.99

20.0%

Google -- expect a price rise

Google declined to comment, but it does not currently charge GST on online purchases made by Aussies from overseas suppliers in the Play Store. Expect a price rise of 10 percent on overseas purchases like movies, TV episodes, apps and games. 

Apple -- no change

Apple declined to comment on the record, but it currently charges GST on all iTunes purchases, so don't expect any changes.  

Spotify -- no change

A spokesperson for the Swedish company said, "At this time, we have no plans to increase prices for Spotify in Australia." Spotify currently charges AU$11.99 per month for its premium service. 

Steam -- expect a price rise

Steam did not respond to our request for comment, but the online games platform currently charges prices in US Dollars. We'll expect a 10 percent bump on July 1 when it will need to start charging GST.

Adobe -- no change

If you're buying subscriptions online for Adobe's software, you're already paying in dollarydoos and GST is included in this price.

The fine print

  • Changes only apply to companies previously not charging GST, so you won't see anything happen with companies that have been charging GST before July 1
  • GST will apply to goods at all prices (not just over AU$1,000)
  • The new price you see online will be the price you pay, as GST liability rests with the supplier selling you the goods
  • Business-to-business transactions are exempt

Overseas online shopping could soon get pricier, too

The government has been considering introducing GST on online purchases below AU$1,000. Changes to the Low Value Import Threshold (LVIT) would mean a 10 percent GST hike on all online purchases from overseas below that magic $1,000 mark.

Originally slated to come in on July 1, 2017, the same day as the Netflix Tax, those changes have thankfully been delayed until July 1, 2018. (We like to think this is so people aren't so darn confused). But we can expect a fight ahead of next July.

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