Government changes tack on online shopping GST to avoid price hikes

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#2110619 18-Oct-2018 18:58

Tzoi:

If IRD find that an overseas seller who should be charging GST isn't, they will get a court order in NZ which can then be enforced overseas through various agreements NZ has with other countries to collect tax. Otherwise, if there is someone in NZ who owes money to that overseas seller, they can get an order that the money should be paid to it instead.

I have serious doubts on this point.

If that is the case, then why don't we just tax american citizens on their income? If they don't pay, lets make a court order.

I don't think the NZ government can tax completely foreign companies on their activities outside this country.

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#2110621 18-Oct-2018 19:15

I don't have an issue with this. But NZ retailers are dreaming if they think this will somehow save them.

Often the price differential between local pricing and landing the same product from China is 400-500%, not 15%. And that's even assuming that the NZ retailer has the item at all, and in many cases they don't.

Many retailers in NZ seem to have a model based around limited range, poor service, and excessive pricing - presumably on the basis that it's a small market with a captive customer base. The internet has changed that. Those that don't adapt are dying and will continue to do so, and 15% being added to lower value imports won't make a lot of difference.

And given how they have gouged and exploited me over the years, I will shed not a single tear for them.

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#2110640 18-Oct-2018 19:51

surfisup1000:

Tzoi:

If IRD find that an overseas seller who should be charging GST isn't, they will get a court order in NZ which can then be enforced overseas through various agreements NZ has with other countries to collect tax. Otherwise, if there is someone in NZ who owes money to that overseas seller, they can get an order that the money should be paid to it instead.

I have serious doubts on this point.

If that is the case, then why don't we just tax american citizens on their income? If they don't pay, lets make a court order.

I don't think the NZ government can tax completely foreign companies on their activities outside this country.

Because there's no nexus with NZ there... GST is a tax on consumption

surfisup1000

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#2110659 18-Oct-2018 20:20

Tzoi:

surfisup1000:

Tzoi:

If IRD find that an overseas seller who should be charging GST isn't, they will get a court order in NZ which can then be enforced overseas through various agreements NZ has with other countries to collect tax. Otherwise, if there is someone in NZ who owes money to that overseas seller, they can get an order that the money should be paid to it instead.

I have serious doubts on this point.

If that is the case, then why don't we just tax american citizens on their income? If they don't pay, lets make a court order.

I don't think the NZ government can tax completely foreign companies on their activities outside this country.

Because there's no nexus with NZ there... GST is a tax on consumption

I'm not saying you're wrong. But, I imagine the foreign supplier would say that NZ had no jurisdiction to apply the tax to a US transaction therefore there is no tax to collect in the first instance.

If the supplier is resident in the USA, and the point of sale is in the USA .... therefore outside the jurisdiction of New Zealand tax laws.

A US judge would just tell the NZ govt to collect the tax themselves, after all, the recipient is in NZ and within NZ jurisdiction. It just smacks of laziness on the behalf of NZ tax authorities.

But who knows, has such a scenario ever been tested in courts?

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#2110671 18-Oct-2018 20:44

As regards the no need to register if sales are below $60,000: Just how exactly will anyone in NZ be able to determine total NZ sales of a company in, say, Billings, Montana?

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#2110732 19-Oct-2018 04:17

frankv:

sbiddle:
That $40 includes distributor and retail margins and factors in warranty obligations and the CGA.

Why do we need a "distributor" and a "retailer"? This might have made sense in the past when there were all kinds of Customs and other hoops to jump through, but a distributor nowadays is irrelevant.

I do accept that CGA obligations *could* push the price up, and that *could* be worth paying for. But is the warranty from Amazon any different from the warranty offered by PBTech? And does it not cover the CGA obligations?

Who is the retailer supposed to buy product from otherwise? The distributor/retailer model is still the basis of retail in most countries across the world.

Unless a product comes with a global warranty your product warranty is very likely worthless locally as there is no obligation for a local distributor to carry the warranty. Any returns will have to be under whatever warranty obligations Amazon offer or to the manufacturer / distributor in the US.

And as for Amazon and the CGA they have no obligations at all since they're not NZ based.

The great thing is people have a choice... You can pay a $40 premium to buy something locally knowing they're supporting our economy and have full warranty cover and should something happen outside the warranty that the CGA will cover them or they can buy from an overseas retailer and get something cheaper.

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#2110733 19-Oct-2018 04:26

JimmyH:

I don't have an issue with this. But NZ retailers are dreaming if they think this will somehow save them.

Often the price differential between local pricing and landing the same product from China is 400-500%, not 15%. And that's even assuming that the NZ retailer has the item at all, and in many cases they don't.

Many retailers in NZ seem to have a model based around limited range, poor service, and excessive pricing - presumably on the basis that it's a small market with a captive customer base. The internet has changed that. Those that don't adapt are dying and will continue to do so, and 15% being added to lower value imports won't make a lot of difference.

And given how they have gouged and exploited me over the years, I will shed not a single tear for them.

I have no issues either paying GST on imported goods. I can't buy something in a store GST free so don't see why I should be able to import something and not pay it.

And it is worth remembering that GST is *technically* charged on all imports at present - it is simply not collected is the value is below the de minimis because it's deemed that the cost of collection will be greater than the revenue collected.

I know so many people buying products now from Aliexpress, many of whom I wouldn't expect to be their typical customers. I really don't know how people buying cheap stuff from China and hoping to sell it for an inflated price on Trademe or daily deal sites really still think it's a good idea.

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#2110740 19-Oct-2018 06:57

sbiddle:

Who is the retailer supposed to buy product from otherwise? The distributor/retailer model is still the basis of retail in most countries across the world.

The manufacturer. Or Amazon.

The great thing is people have a choice... You can pay a $40 premium to buy something locally knowing they're supporting our economy and have full warranty cover and should something happen outside the warranty that the CGA will cover them or they can buy from an overseas retailer and get something cheaper.

I agree that paying $40 for CGA coverage is a good idea. I'm less happy with paying extra to support our economy. You might as well pay more tax and the Govt subsidise local industry.

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#2110745 19-Oct-2018 07:25

sbiddle:

There was probably no real choice for the government but to increase the limit from $400 to $1000 for duty and IETF.

It was unfair that somebody importing products worth $401 was effectively subsidising the MPI charges somebody buying goods under $400 when the MPI costs were all about user pays meaning that everybody should pay their way.

How is that logical? If it's user pays then it should be for everyone. Moving up to $1000 only make it unfair to someone buying the $1001 product under your logic.

Geektastic:

surfisup1000:

Geektastic:

I still do not really see how the NZ government can make overseas companies comply unless they are very large companies - let us imagine, for example, a boutique handmade firearms company in the USA making aftermarket grips, rails and so on for guns. Say they employ 5 people in deepest Kansas. How exactly will the government of NZ get them to charge GST?

They can't. No jurisdiction.

They could return shipments though I suppose.

I really hope this backfires on new zealand too, with foreign governments making new zealand exporters pay tax in their countries too.

I suppose they could do that - but they would have to open every single package and inspect the paperwork etc in order to first determine whether GST had been charged or not...! That is likely to be prohibitively time-consuming I imagine.

And that's why it's dumb reducing the threshold and making more work for themselves. The paperwork, storage space while inspecting goods, more officers all cost more money. When is it economically viable to enforce this change?

Reality is some products have a huge price difference between import and NZ retail prices. I will keep buying from Amazon simply because even with 15% it's still a lot cheaper.

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#2110760 19-Oct-2018 07:52

freitasm:

sbiddle:

There was probably no real choice for the government but to increase the limit from $400 to $1000 for duty and IETF.

It was unfair that somebody importing products worth $401 was effectively subsidising the MPI charges somebody buying goods under $400 when the MPI costs were all about user pays meaning that everybody should pay their way.

How is that logical? If it's user pays then it should be for everyone. Moving up to $1000 only make it unfair to someone buying the $1001 product under your logic.

Well it does make it unfair because those MPI costs are now only being paid by an ever smaller number of importers - at the end of the day importers and retailers are now subsidising all individuals who import goods.

But very few people import goods over $1000, and if you do you already require a client code anyway. They've had to move the $400 limit to $1000 just to make the new law simpler, not more complex.

It'll be really interesting to see how much revenue MPI lose from these changes vs GST revenue.

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#2110771 19-Oct-2018 08:53

sbiddle:
freitasm:

sbiddle:

There was probably no real choice for the government but to increase the limit from $400 to $1000 for duty and IETF.

It was unfair that somebody importing products worth $401 was effectively subsidising the MPI charges somebody buying goods under $400 when the MPI costs were all about user pays meaning that everybody should pay their way.

How is that logical? If it's user pays then it should be for everyone. Moving up to $1000 only make it unfair to someone buying the $1001 product under your logic.

Well it does make it unfair because those MPI costs are now only being paid by an ever smaller number of importers - at the end of the day importers and retailers are now subsidising all individuals who import goods.

But very few people import goods over $1000, and if you do you already require a client code anyway. They've had to move the $400 limit to $1000 just to make the new law simpler, not more complex.

It'll be really interesting to see how much revenue MPI lose from these changes vs GST revenue.

I still don't see why it's "user pays". Customs is run using taxation income.
It's just an excuse to get more income dressed up politely in my opinion rather than an actually necessary charge.
Fair enough of its for inspection of containers of imports etc but for a Jiffy bag of computer stuff from Amazon? Nah. Good riddance to it.

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#2110778 19-Oct-2018 08:57

MPI is not Customs...

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#2110781 19-Oct-2018 09:00

sbiddle:

Who is the retailer supposed to buy product from otherwise? The distributor/retailer model is still the basis of retail in most countries across the world.

Unless a product comes with a global warranty your product warranty is very likely worthless locally as there is no obligation for a local distributor to carry the warranty. Any returns will have to be under whatever warranty obligations Amazon offer or to the manufacturer / distributor in the US.

And as for Amazon and the CGA they have no obligations at all since they're not NZ based.

The great thing is people have a choice... You can pay a $40 premium to buy something locally knowing they're supporting our economy and have full warranty cover and should something happen outside the warranty that the CGA will cover them or they can buy from an overseas retailer and get something cheaper.

Honestly, sometimes I feel that my 'warranty' is worthless here anyway given the crap businesses pull on CGA. I would be more amenable to even a 20%GST if I knew for a certainty we had some hard and fast rules rather than 'expected lifetime' or 'acceptable quality'.

Right now i'd be paying GST and a premium and it'd still be a toss up if I can get pbtech to replace a hard drive, or noel leeming to fix a phone.

Amazon returns i've found is far less hassle, even with having to return ship it.

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#2110787 19-Oct-2018 09:18

freitasm: MPI is not Customs...

Semantics. All run from taxation.

sbiddle

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#2110791 19-Oct-2018 09:22

Geektastic:

freitasm: MPI is not Customs...

Semantics. All run from taxation.

No it's not.

MPI recovers the cost of biosecurity screening using a user pays scheme that's part of the legislation. It is how it has always operated.

The irony of the legislation changes now is that the retailers complaining about private imports not being charged GST are now subsidising the cost of MPI screening for individuals importing goods who will no longer pay these.

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