Australia GST settlement update

Mon 17th Mar 2014

Western Australia (WA) is to receive an increase in its share of the federal GST take this year.  The news comes as WA was threatening to block Australian GST on foreign e-commerce until its share of the national consumption tax was increased.

The increase comes on the back of an improving consumer economy, which has boosted Australian GST which is currently levied at 10%.  This will translate into an extra AUS$ 500m for WA.

Under the Australian GST split, WA receives only 27c of all GST collected in its boundaries.  This reflects its large economy, which helps to subsidies the less wealth other 7 states.  On the basis of the share, WA was headed towards a deficit.  However, the split will now be over 35c to WA, which means this will translate into a surplus for 2014/15.

Earlier this year, the WA state government blocked plans to raise the Australian GST import threshold as a negotiating strategy to secure more of the federal GST revenues.  The threshold is currently AUS$ 1,000, which means most commerce with non-resident online retailers to Australian consumers goes untaxed.  This creates an uncompetitive marketplace for domestic online retailers.