The Netflix Tax: Answers to Three Burning Questions


Presto Streaming TV and Movies

The Federal Budget confirmed the so-called Netflix tax, so Australia’s goods and services tax will apply to overseas companies like Netflix, which sell digital products to Australian consumers. Here we try to answer three common questions about the tax, including how it will affect you.

Why?

“It is unfair that overseas based businesses selling services into Australia may not charge GST when local businesses have to charge GST,” Treasurer Joe Hockey said in a recent speech. In other words, this tax is meant to level the playing field for businesses in Australia.

What?

The GST will apply to digital products and services, including e-books, music, movies, digital magazines, and so on. Basically anything bought online from overseas suppliers. That means Netflix as well.

However, the tax won’t apply to iTunes purchases, since ITunes users in Australia already pay GST on downloads. The government is planning to raise $350 million over the next four years by applying the 10 percent goods and services tax.

When?

Don’t worry, your Netflix subscription won’t cost more overnight. Digital products and services will be taxed from 1 July 2017, assuming the relevant legislation is passed. Currently, the cheapest Netflix subscription costs $8.99 a month, $1 a month less than competitors Stan and Presto.

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