Downloaded music, movies and books will be subject to GST under a deal reached between the federal and state treasurers.

Federal Treasurer Joe Hockey said it was an “integrity” measure and not a broadening of the GST – which the coalition had promised it would not do.

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Under the plan, a company providing an “intangible service” into Australia – wherever they are located – would charge GST on those services.

“The states agreed in principle that we should move in that regard and we have offered to work as quickly as possible with them to introduce legislation to address that,” Mr Hockey said on Thursday after meeting with other treasurers.

Treasury deputy secretary Rob Heferen told a Senate inquiry on Thursday that through the work of the OECD it had found compliance costs would be very low if international providers of imported goods had to register and simply pay the GST. 
He said there was no legal obstacle to the change.

“Australia wouldn’t need the agreement of any country to do this. The federal government would need the agreement of the states and territories,” Mr Heferen said.

Mr Hockey said the move had the potential to generate billions of dollars in revenue.
 It could be followed by a further change involving applying the GST to goods imported online which are valued at less than $1000.