The growing trend to shop online has prompted a government inquiry into Australia's retail sector amid complaints by traditional retailers that shoppers are avoiding paying GST by buying goods from overseas websites.
The federal government on Saturday announced a Productivity Commission inquiry into the future of the sector and a crackdown on businesses rorting the system to avoid paying tax.
Traditional retailers want the government to scrap the $1000 GST-free threshold for imported goods, arguing it puts them at an unfair disadvantage in competing with online stores.
Assistant Treasurer Bill Shorten said consumers should be able to shop in whatever manner they choose, including online.
"The case for lowering the threshold has significant opposition, including the cost of collection and consumer objections," Mr Shorten said in a statement.
""However, we are taking the concerns of retailers seriously, which is why I have asked the Productivity Commission to look into these issues."
Thanks to the strong Australian dollar, consumers are increasingly turning to overseas websites for GST-free purchases.
A raft of retailers have complained they are losing out to foreign websites and are campaigning against the threshold while the likes of Myer and Harvey Norman have flagged setting up websites to ship goods directly from China to Australian consumers.
Home Affairs Minister Brendan O'Connor said the government would conduct a compliance campaign to ensure GST and customs duty concession for imports worth $1000 or less were not being abused or exploited.
"It's important people follow the rules and not try to rort the system," he said.
The crackdown will begin in 2011.
The moves came as Access Economics figures showed Australians spent $19-24 billion buying goods online in 2009, representing about three per cent of total sales.
The report showed at least 50 per cent and up to 80 per cent of that amount was spent with Australian onlineretail outlets.
Communications Minister Stephen Conroy said with online retailing only accounting for three per cent of the Australian total, there was great potential for it to grow.
Australia's retail turnover was $242 billion for the 12 months to October.
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It Was Gerry Harvey complaining about this because his bussiness is suffering?He closed down his stores in ireland etc,Competition is good but not in the eyes of Harvey norman,drop your prices to an acceptable level instead of having a 1000%markup on most goods,or shut up!!