An agreement by national leaders to lower the GST-free threshold to capture online transactions under $1000 is hoped to put domestic retailers on a more equal footing with their international competitors.

Online retailers have long suffered from the current exemption as they lose customers to overseas retailers looking for cheaper goods.

“Ensuring overseas online transactions are treated the same as domestic sales makes a lot of sense because it will mean retailers are operating on a more level playing field. We know many local retailers are doing it tough in the face of online overseas rivals and this change will remove an unfair advantage,” said Kate Carnell AO, CEO of the Australian Chamber of Commerce and Industry.

According to Ms Carnell it is hoped that the GST revenue base will also be protected by the changes given the growing trend for online shopping.

“The leaders have recognised the very real problems posed by our outdated tax system,” said Ms Carnell.

Tax systems across the world already have lower thresholds in place with the UK and Canada taxing online goods above $26 and $20 respectively.