The government will collect the GST on online services such as Netflix and digital downloads such as games and movies.
Treasurer Joe Hockey announced the measure today on the eve of the government's second budget. Hockey today also revealed a crackdown on aggressive tax minimisation strategies employed by multinational companies.
"Tomorrow night I will ... be introducing draft legislation levelling the playing field for the GST," the treasurer told a press conference this afternoon.
"It is plainly unfair that a supplier of digital products into Australia is not charging the GST whilst someone locally has to charge GST," Hockey said.
Approached for comment about the tax changes, which have been widely discussed since the company's debut in Australia, a Netflix spokesperson said: "Netflix has been and will be compliant with all applicable laws and regulations, and we pay taxes as required under local and national law."
The original GST legislation "did not anticipate the massive growth in the supply of digital goods, look movie downloads, games, and ebooks from overseas," the treasurer added.
Hockey said he had consulted with the states and territories on the changes to the GST. Draft legislation for the change to the GST will be revealed tomorrow.
"The revenue from this is expected to be $350 million over the next four years, and every dollar of that will be going to the states," the treasurer said.
Other countries will introduce similar legislation, he added, including Japan, Norway, South Korea, Switzerland and member countries of the EU.