Kiwis to be hit with tax on online purchases

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Forums › Finance and wealth management › Kiwis to be hit with tax on online purchases

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#1903135 17-Nov-2017 09:39

surfisup1000:

Aredwood: Be careful what you wish for. As the easiest way of avoiding a capital gains tax is to not sell any houses. In other words people will only sell their houses if they have to. A CGT might actually cause house prices to increase. As less people selling means less houses available, therefore prices rise due to lower supply.

I'm not interested in a CGT to control house prices.

Rather , to equalise the tax burden between those who pay too little tax and those who pay too much tax and to lessen the relevance of how something is taxed when making investment decisions. My main concern with a comprehensive CGT is extra bureaucracy and introduced inefficiency.

But I've gone off topic so no more on this from me!!!

There isn't a single piece of evidence anywhere in the world to back claims that a CGT does anything to control house prices or limit increases.

Does that mean we shouldn't have a CGT? No it doesn't. But selling a house should not be a tax free benefit if you make a profit when most other forms of income are taxable. There is a requirement at present to pay tax on investment properties sold for financial gain if the intent for purchase was for ultimate resale so the benefits of a CGT as well as the current law are questionable.

frankv

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#1903138 17-Nov-2017 09:43

sbiddle:

If the government cut the de minimis value to $0 then yes you would have to pay GST. The logistics of it were detailed in the NZ post discussion paper on how they would impliment such a process. Assuming the package is handled by NZ Post they will collect the GST and estimate processing costs would be around $20 per item and unless legislation changes were made you'll also have to pay the existing MPI biosecurity charges and customs import fees of $50 so will be paying $70 in fees so the government can collect their 44c in GST.

Of course MPI biosecurity costs would have to drop if every item is charged for as they'll be able to recover their revenue from a lot more people. Assuming both charges were slashed from $50 to $20 it's still going to be steep.

The fact NZ post extimate handling costs of $20 to recover 44c shows the fundamental flaws in trying to collect tax if you scrap the de minimis exemption entirely.

I had thought that the de minimis value was set at NZ$60 because it cost the Govt about that to process, so below that it wasn't worth collecting. However, reading this suggests that it's an arbitrary figure that can be adjusted at will in accordance with Govt policy.

That $50 entry fee, if you have to pay it, really adds a sting to importing items. It seems bizarre to me that the de minimis value doesn't include it. If it was included, then anything imported priced above about NZ$66 would attract Govt charges of $50+GST.

NB that clothing and shoes still have duty on them, so currently you pay duty+GST+entry fee if the ((GST+duty on the goods) plus GST on the freight) exceeds $60 (i.e. if the item exceeds NZ$225 or so, you pay $110 to the Govt).

I'm not sure I agree that protecting the primary industries from imported species is something that importers should pay for. I tend to think it's something that primary industries should pay for, even though it means paying higher prices for milk and cheese. Or that the country as a whole should pay for, since we all benefit from those primary industries. So, even though I rarely import items where GST is payable, I think I'd rather pay (along with every other NZer) an extra $50 per year or whatever in income tax and no entry fees at all.

shk292

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#1903139 17-Nov-2017 09:50

tdgeek:

So I can use my NZ Netflix account in the US for US content if I am there?

From my experience, a Netflix account from any country works just fine in any other country, but you can only view material that is available in the country you (or at least your IP) is in at the time of viewing. So yes, if you go to the US, you'll see US content while you're there.

This also apples to cached content - if it's not available in your overseas destination, you won't be able to view it. Although presumably, if you left your device in flight mode, you would be able to

1101

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#1903140 17-Nov-2017 09:56

sam395:

Gst is supposed to be on goods and services supplied in New Zealand clearly they are not supplied in nz?

Good point. The sale is in China, not NZ.
So if they tax it, that tax is in reality an import tariff.

Lets see how that sits with out Free Trade partners . Im sure the major Ch online sellers will be able to have a
quiet work to the CH officials who could put some real pressure in NZ Govt .
Wait till China starts a tit for tat & starts taxing NZ goods at their border. Cant have one without the other .

And no one has any idea how to implement a compulsory gst tax on all goods bought online from Asia.
Asian online sellers will just say not interested in collecting tax for you (or will collect & Keep it).

There is no way to do this at our border, NZ Post(or was it customs ?) has already admitted this, the volume is just too great.
They would have to open each package, check the contents, then go online to find its actual retail price
Then we get the issue of used goods, eg used books , reconditioned items etc. How is anyone going to be able to put a value on those?
We all know the declared value is often nonsense, with online sellers giving buyers the option of what the declared value will be (10%, 50%, 100% etc)

As it is, many parcels over the $400 threshold get past customs with no gst payable . They simply cant check everything coming in

What UK & some other countries do , is get the international couriers to collect the sales tax .
Whats been happening is some of these couriers have been charging exorbitant (tax) collection fees, the poor buyer has no option to pay whatever is demanded
Its been little more than extortion .

Benjip

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#1903141 17-Nov-2017 09:57

Not sure why people are getting wound up about tiny GST amounts being applied to small imports?

I'm fairly sure the government is suggesting they would go after large retailers overseas to ensure that GST was charged at point of sale, which would then be distributed to the NZ government annually etc..

Eg. You buy something from AliExpress for $3, they (AliExpress) charge you $0.45 GST. They hold on to that 45 cents until end of year when their GST is due with the NZ government, at which time they transfer it.

This would apply to large retailers, just like it does with the current "online services" rules (GST on iTunes/Apple Music/Netflix etc.). I can think of 4 large retailers off the top of my head, who would probably account for 50-70% of all personal imports – Amazon, AliExpress/baba, Newegg, Asos.

tdgeek

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#1903155 17-Nov-2017 10:37

sir1963:

I will be REALLY interested in how they are going to handle birthday and Xmas gifts, no government is going to want to look like the Grinch at Xmas time.

I didnt realise GST did not apply to gifts. I need to buy one birthday present this weekend, I will ensure it is exempt....

sir1963

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#1903157 17-Nov-2017 10:39

tdgeek:

sir1963:

I will be REALLY interested in how they are going to handle birthday and Xmas gifts, no government is going to want to look like the Grinch at Xmas time.

I didnt realise GST did not apply to gifts. I need to buy one birthday present this weekend, I will ensure it is exempt....

Ones coming from overseas, lots of families have extended family overseas.

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tdgeek

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#1903162 17-Nov-2017 10:51

sir1963:

tdgeek:

sir1963:

I will be REALLY interested in how they are going to handle birthday and Xmas gifts, no government is going to want to look like the Grinch at Xmas time.

I didnt realise GST did not apply to gifts. I need to buy one birthday present this weekend, I will ensure it is exempt....

Ones coming from overseas, lots of families have extended family overseas.

If I buy a gift at The Warehouse, and the gift comes from overseas, I pay GST. If I import the gift, I should pay GST as its consumed in NZ, as GST is a consumption tax. The gift may be paid for overseas, but its consumed in NZ. If all gifts were all exempt from all other taxes such as duties, levies, then your reasoning would add up.

The purpose of GST was to keep it simple. Its not about any particular product as sales taxes were, and it also grabs all spending, including tax free spending, such as theft. The key is its a consumption tax for goods and services consumed in NZ. Gifts aren't GST exempt when we consume them here

sir1963

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#1903173 17-Nov-2017 11:31

tdgeek:

sir1963:

tdgeek:

sir1963:

I will be REALLY interested in how they are going to handle birthday and Xmas gifts, no government is going to want to look like the Grinch at Xmas time.

I didnt realise GST did not apply to gifts. I need to buy one birthday present this weekend, I will ensure it is exempt....

Ones coming from overseas, lots of families have extended family overseas.

If I buy a gift at The Warehouse, and the gift comes from overseas, I pay GST. If I import the gift, I should pay GST as its consumed in NZ, as GST is a consumption tax. The gift may be paid for overseas, but its consumed in NZ. If all gifts were all exempt from all other taxes such as duties, levies, then your reasoning would add up.

The purpose of GST was to keep it simple. Its not about any particular product as sales taxes were, and it also grabs all spending, including tax free spending, such as theft. The key is its a consumption tax for goods and services consumed in NZ. Gifts aren't GST exempt when we consume them here

Oh I understand that, but when Granny sees a pair of booties for their new grandchild and the parent have to shell out $20-$70 for a handling fee that is going to leave a VERY sour taste.

Especially as the gift was never purchased here by any NZ resident.

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#1903174 17-Nov-2017 11:35

I'm not sure why we are going on about this, it's not happening is it?

sir1963

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#1903176 17-Nov-2017 11:38

Batman:

I'm not sure why we are going on about this, it's not happening is it?

"Yet"

As the shampoo ad went "it won't happen over night, but it will happen". And I am sure it will be argued that it is not a tax increase or a new tax its just being applied "more fairly"

MarkH67

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#1903287 17-Nov-2017 14:58

tdgeek:

I didnt realise GST did not apply to gifts. I need to buy one birthday present this weekend, I will ensure it is exempt....

Nor did any government since GST was introduced, as far as I know.

Anyone can claim any merchandise is a gift, but if goods come into NZ with a worth above $400 then they are eligible for GST.

I once found out that clothing which is eligible for duty + GST that is more than the threshold amount could be stopped until the duty + GST is paid, even if the total value is well under $400. They worked out to be a bit pricey for a few T-Shirts, but I couldn't buy the same thing here so I just sucked it up and carried on.

MarkH67

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#1903288 17-Nov-2017 15:02

Batman:

I'm not sure why we are going on about this, it's not happening is it?

There was an article in the NZ Herald: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11944260

Some of us are wondering how it will work and what it will mean. From what I understand this incompetent government has said this will happen but have come up short on explaining how they will achieve it. That is what we are discussing here.

If you aren't interested in the discussion here then why on earth are you reading this thread?

wellygary

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#1903289 17-Nov-2017 15:20

1101:

sam395:

Gst is supposed to be on goods and services supplied in New Zealand clearly they are not supplied in nz?

Good point. The sale is in China, not NZ.
So if they tax it, that tax is in reality an import tariff.

Lets see how that sits with out Free Trade partners . Im sure the major Ch online sellers will be able to have a
quiet work to the CH officials who could put some real pressure in NZ Govt .
Wait till China starts a tit for tat & starts taxing NZ goods at their border. Cant have one without the other .

Sigh,

This is not a new tax. GST exists already and is in ALL of our trade agreements, all that is changing is the "de minis" Value is being removed,

People raised the "oh but US/China corporations with no presence in NZ wont charge the evil Netflix tax" - from what I understand most do, and the revenue generated at $100 million is 300% higher than estimated...

Corporates (with a few exceptions) generally want to be good global citizens,

frankv

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#1903293 17-Nov-2017 15:23

MarkH67:

From what I understand this incompetent government has said this will happen but have come up short on explaining how they will achieve it.

Yes indeed. Just as the last Government, equally incompetently, said they would do and fell woefully short.

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