Wednesday, 22 April 2015

What is the “Netflix tax” and how will it affect me?

Online streaming services are the latest and greatest thing in Australia at the moment, with services such as Netflix, Stan and Presto allowing consumers to watch hundreds of films and TV series from as little as $8.99 a month.

These services are revolutionising how Australians watch TV. We no longer have to face the long wait for series to be released in Australia, or take part in illegal downloading, to stay current with our American friends. We have access to the latest episodes of popular shows as soon as they’re released.

If you’ve watched the news recently, you would have heard of the ominous sounding “Netflix tax”, the proposed GST extension targeting your digital media habits.

So before you decide if you’d prefer to watch Orange is the New Black or Better Call Saul, you may wish to consider how the “Netflix tax” could affect your viewing habits.

What is it?

Last week, Treasurer Joe Hockey announced that the GST might be extended to “intangible” online services in an effort to increase economic “integrity”.

Not just targeted at video streaming customers, consumers may pay 10% more for a range of online purchases including music and e-books, as well as ride-sharing services such as Uber.

According to the Sydney Morning Herald, the tax is expected to raise approximately $400 million in GST revenue.  

Why now?

The proposed GST extension follows the controversial Dallas Buyers Club pirating case, in which a number of Internet Service Providers (ISPs) were ordered to hand over the names of customers who had pirated the film.

Dallas Buyers Club LLC alleged that over 4000 Australians pirated the 2013 film.

This case highlighted the risks of illegal downloading, forcing many Australians to consider legal streaming services. 

So why are we being taxed?

While Netflix have stated they are willing to comply with the GST changes, Australian-based streaming services are unhappy that this has not yet been implemented.  

"They have been able to price themselves below the company that we have, which is Presto…So this is an unfair, unlevel playing field and we would certainly be looking for Parliament to fix that problem," said News Corp CEO Julian Clarke at a Senate meeting. 

Consumers are also up in arms, with many people questioning why consumers, and not large corporations, are being taxed.

What do you think of the “Netflix tax”?