Costco Pays 6% GST on Membership Fees to ATO (Instead of 10%)

ca4cpa on 22/02/2019 - 15:20
Last edited 22/02/2019 - 16:07

I have renew my membership recently and found out the following :

   Australian Regional Office:
   Costco Wholesale Australia, Pty. Ltd.
   17-21 Parramatta Rd
   Lidcombe, NSW 2141
   ABN No: 57 104 012 893


   TAX INVOICE
   ------------------------------------------------------------------------
   1 x Business Membership (valid for 12 months, renewable)    55.00
   ------------------------------------------------------------------------
   Total (  6.23% GST included)                                55.00

This is what I got when I paid my subscription.

Generally, upon renewal for membership/subscription GST is 10% means ATO will get $5 out of $55
But, Costco pays only 6.23% means ATO will get $3.22 out of $55.

This is $1.77 less per member - which is direct income for COSTCO.

What is your thoughts

Poll Options expired

  • 35
    I do not care
  • 11
    Australia need better share
General Discussion

Related Stores

Costco Wholesale
Costco Wholesale

Comments

  • lubos on 22/02/2019 - 15:36
    +1

    I've noticed GST percentage Costco charges on memberships keeps changing year after year.

    If Costco would be selling GST-free items only, then I imagine membership fee could be GST-free. Since they sell mixture of both GST-free and GST-inclusive items, then Costco is probably calculating their GST rate on membership as average GST rate they pay on total sales.

  • one man clan on 22/02/2019 - 16:05
    +9

    It's a bloody outrage it is! We're gonna take this all the way to the Prime Minister! Hey! Mr. Prime Minister! ANDY!

  • chumlee on 22/02/2019 - 16:35

    Senate enquiry needed

    • ca4cpa on 22/02/2019 - 17:11

      if there are 300,000 members in Australia * 1.77 = half a million $$$ back to HO pocket each YEAR.

      • CandyMan on 23/02/2019 - 15:52

        The govt would probably waste it anyway
        That’s peanuts in govt terms

    • HighAndDry on 22/02/2019 - 17:21
      +2

      *inquiry.

      I guess we can just ask the senate too.

      • chumlee on 22/02/2019 - 18:01
        +3

        Thanks for your inquiry

        • HighAndDry on 22/02/2019 - 18:03

          I just very mildly hate you lol.

  • abb on 22/02/2019 - 16:49

    Ask Costco?

    There are a few threads scattered around the internet on this topic but nobody seems to have actually asked the only people who would be able to answer…

    PS enjoy the traffic queues

    • ca4cpa on 22/02/2019 - 16:59
      +3

      Costco says "Our membership entitles members to purchase GST and GST free goods. Based on this, ATO has granted us to charge 6.23% for this year based on previous year's sales. This is subject to change every year. But the membership fee is still $55 and $60 as a total cost to the member."

      • xuqi on 22/02/2019 - 17:10
        +3

        Ok, then what's your problem?

        If ATO doesn't have an issue then its done & dusted.

        • ca4cpa on 22/02/2019 - 17:12
          -3

          Where is the proof that ATO advised to them..

  • Trying2SaveABuck on 22/02/2019 - 17:04
    +3

    GST is a bit of bullshit because they were supposed to get rid of stamp duty on properties. It is why everyone hates the government!

    • ca4cpa on 22/02/2019 - 17:09

      Yes that was the case in earlier years.

      Now government can not afford this at the rate of 10% (and stamp duty as it is) and thinking to increase it 12 or 15% like NZ.

      • xuqi on 22/02/2019 - 17:11

        That's always the way with regressive taxes like the GST.

        • HighAndDry on 22/02/2019 - 17:23

          It's a tax charged on everyone irrespective of race, creed, or financial circumstances. What could be fairer?

        • SBOB on 22/02/2019 - 18:06
          +1

          That's always the way with regressive taxes like the GST.

          how is it regressive ?
          I dont think it works on its own, but it does ensure that those that consume a lot (ie those with more money) do have to pay more due to this

          • fantombloo on 22/02/2019 - 20:29
            +1

            @SBOB: Those with more money often often just hoard and reinvest rather than consume a lot.

            • Quantumcat on 22/02/2019 - 23:42

              @fantombloo: That doesn't make sense. They will be spending money everywhere to have a nice lifestyle. Unless you're saying that rich people have more frugal lifestyles than poor people?

      • HighAndDry on 22/02/2019 - 17:22

        If 10% GST wasn't enough to remove stamp duty (or even decrease it), an addition 2% or 5% isn't going to be enough either. As Pastry says: "This is why everyone hates the government."

    • whooah1979 on 22/02/2019 - 20:50

      The GST is an unfair tax for VIC, NSW and WA residents. The hate should be directed towards the states that gets more than what they collect.

  • nicolemcmilllon on 25/02/2019 - 08:31
    -2

    I can give you guys a definitive answer.

    GST is theoretically charged on top of the price a business wants to charge for a particular product. Theoretically, a business says I want to charge $50 and then adds $5 GST making the total price to the consumer $55.

    In practice however, businesses can only charge an amount they think the consumer is willing to pay. In this case, the business charges $55 regardless of the GST component because they think the consumer is willing to pay $55.

    Therefore, if suddenly GST was raised to 50%, the business would still only charge $55 not $75 because they believe the consumer will only pay $55, and thus they would have to absorb the increased cost of the GST.

    This is the practical repercussions of having GST. It is the same for businesses who are not yet registered for GST. They charge the maximum they think their consumers will pay for a product. When they register for GST they have to now absorb that 10% hit rather than adding 10% to the price because the end consumer doesn't care about GST. (Obviously this is different when businesses sell to other businesses as both are registered for GST and thus the net effect of GST is nil).

    Hope that helps :)

  • browser on 03/12/2019 - 23:46

    Interesting, only just noticed this today.

    Today's GST rate is 6.32%, slight increase from OP's 6.23%, but a variance nonetheless.

    So it's probably correct to assume GST on membership is some sort of ratio relating to GST vs GST free products they sell.

Login or Join to leave a comment
Login Join