GST to be charged on purchases below $400

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#2006370 2-May-2018 08:10

If a seller is hiding that they’re doing over $60,000 a year in terms of this new proposal surely that’s not on my head.

I only order every three months roughy so parcels don’t arrive same time.

Some sellers might even ship with different company names on packages, and have more then one mail box for return addresses.

The 15% extra makes no difference to me in where I purchase, just more concerned about techniqual aspects, someone that gets money in their own currency now has to convert to currency of buyer to pass on tax, how complicated enforcement is going to be, and extra costs vs extra revenue to current system.

debo

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#2006380 2-May-2018 08:42

So if i buy something of Amazon, then Amazon collects an extra 15% for GST. Then, if Amazon doesn't ship that item to NZ, I send the item via Youshop. Then, Youshop collects a second 15% for GST. How do we claim the second amount of GST back?

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#2006388 2-May-2018 09:08

rugrat: If the taxation department starts seizing payments to overseas companies, won’t those companies then turn around to firms and just say payment must be received in full before they send the goods.
I.e nothing sent on credit.

Then you chargeback the transaction or file a claim in court against them because they failed to deliver a good or service that was fully paid for.

rugrat: If they start trying to prosecute companies in their home land, and 25% of companies don’t comply I wonder how much that’ll cog up the court systems.
Plus I still don’t get how they will know how much business a company is doing. A lot of parcels I receive have a lot less written on them, then what I paid for value written on outside. Guessing it’s what the company would want in insurance if parcel lost.

The dirty secret is that of the 25% of non-compliance, they will only seek to get compliance from maybe half that. Smaller operators will likely be disregarded while they go after bigger fish.

rugrat: Also what happens if exchange rate changes between company collecting money and paying?

Same as currently happens with exchange rate hedging on GST - the IRD publishes daily exchange rates which you can use to essentially "fix" the rate at the time of transaction. You can also use your own if you have a better rate than them. The transaction is definitely the fixed point though.

Tzoi

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#2006395 2-May-2018 09:17

debo:

So if i buy something of Amazon, then Amazon collects an extra 15% for GST. Then, if Amazon doesn't ship that item to NZ, I send the item via Youshop. Then, Youshop collects a second 15% for GST. How do we claim the second amount of GST back?

Amazon won't charge the GST because it's being shipped domestically, not to NZ

Talkiet

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#2006405 2-May-2018 09:40

sbiddle:

rugrat: I can’t control what the seller puts on the parcel, and didn’t ask.
I’ve brought from a number of places, and it seems to be common practice.
The items including postage are under NZ$400, I do small orders at a time to keep below $400.

Just if they use this to work out if a company is doing $60000 worth of business.

Sure - you can't control what the seller puts on the parcel, but if they are declaring false values to avoid GST and/or duty it's you who is liable for this, not the seller. Customs will assess the value of the goods and send you the bill.

Lots of small orders to the same address under $400 will attract the attention of customs - especially if they're arriving at the same time.

Brilliant! So next time I am on holiday I can send you a piece of art I made which is valued at $1M, but I'll declare it as $50. If I send this from a suitably lax foreign country, I have just landed you with a huge bill and perhaps legal action for trying to avoid GST?

It doesn't make logical sense that the receiver is responsible.

Cheers - N

Please note all comments are from my own brain and don't necessarily represent the position or opinions of my employer, previous employers, colleagues, friends or pets.

KrazyKid

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#2006435 2-May-2018 10:44

I found this little Q & A on one website. Seems the government will not chase individuals any more than they do now for undervaluing an item.
(they basically don't want the expense of it I assume)

IF I BOUGHT AN ITEM FROM AN OVERSEAS FIRM AND THEY DIDN'T CHARGE ME GST EVEN THOUGH I KNEW THEY SHOULD, WOULD I BE DOING ANYTHING WRONG?

No. Revenue Minister Stuart Nash says the onus is on the foreign firm to pay GST on items costing more than $400 if they are above the $60,000 annual sales threshold. If they don't, it won't be consumer's responsibility.

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#2006523 2-May-2018 12:55

I'd take anything on a non-customs/IRD website with a large pinch of salt. The legislation is still being developed and until we see the actual rules everything remains a bit uncertain. They will also be talking to their equivalents in Aus to see what they have figured out.

rugrat

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#2006527 2-May-2018 13:01

I think that answer is worded wrongly.

It should be LESS then $400.

GST under the proposal is not charged by the seller when over $400, it’s done at the boarder as now and purchaser pays it along with all the other boarder charges.

Rikkitic

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#2006528 2-May-2018 13:03

I still don't understand how this would work with sites like Aliexpress or maybe even Amazon. I do most of my shopping with Aliexpress. As far as I can see, they are just acting as an agent for many small traders. They don't actually sell anything themselves. I buy different things from different traders and they all go into my shopping basket, but what does Aliexpress have to do with collecting taxes? For the record, I don't have a problem with the tax itself and am not looking for ways to avoid it. I just don't understand why Aliexpress would feel obligated to collect it, or care about doing so.

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rugrat

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#2006531 2-May-2018 13:08

Trade me could get hit by it to as they have foreign sellers.
They’re not happy.

https://i.stuff.co.nz/business/industries/103548827/fear-trade-me-will-have-to-levy-gst-on-many-items-sold-through-its-marketplace

shk292

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#2006533 2-May-2018 13:13

Rikkitic:

I still don't understand how this would work with sites like Aliexpress or maybe even Amazon. I do most of my shopping with Aliexpress. As far as I can see, they are just acting as an agent for many small traders. They don't actually sell anything themselves. I buy different things from different traders and they all go into my shopping basket, but what does Aliexpress have to do with collecting taxes? For the record, I don't have a problem with the tax itself and am not looking for ways to avoid it. I just don't understand why Aliexpress would feel obligated to collect it, or care about doing so.

It's the same - even more so - with ebay. You pay the seller, an individual, when you buy the goods. You then tell the seller the delivery address. I can't see how ebay are going to intervene in this process to charge NZ GST without a major change to their platform. I'd say they are more likely to tell NZ Govt to take a hike

Here's a for instance - what if my friend in the UK buys an item <$400 from Amazon and then sells it to me and sends it to NZ? No lies or false declarations required, no GST payable. And my friend gets a nice bottle of wine for his trouble

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mattwnz

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#2006542 2-May-2018 13:39

One reason stuff in NZ is so much more for retail customers in NZ is due to the CGA, which consumers also pay pay GST on. Yet if you buy for a business, you can usually claim back the GST, but you also don't have CGA protection. But if you buy from overseas, and have to pay GST, you also don't have any CGA protection or any protection under NZ consumer law. So what is GST supposed to cover if you are buying from overseas. eg what benefit from NZ government policies are you getting for the 15% you have to pay to the NZ government? In some ways I almost see it as a type of tariff on imported goods. I wonder if some of these overseas companies will refuse to sell/ship to NZ as a result. Also if using services like youshop which ship to US addresses, how will these companies like amazon know to charge GST anyway? I also think the story about trademe and overseas sellers is interesting.

Rikkitic

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#2006546 2-May-2018 13:43

Excellent point about CGA. I hadn't thought of that.

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Hammerer

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#2006551 2-May-2018 13:55

There's no connection between the government funding consumer protection and the government receiving GST revenue. GST largely offset sales taxes and personal income tax when it was introduced in 1986. The Consumer Guarantees Act was 1993.

frankv

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#2006558 2-May-2018 14:05

Hammerer:

There's no connection between the government funding consumer protection and the government receiving GST revenue. GST largely offset sales taxes and personal income tax when it was introduced in 1986. The Consumer Guarantees Act was 1993.

I'm sure Matt didn't mean 'funding' in terms of the Govt.

When I buy something from an NZ business, they have to factor in the costs of complying with CGA into the price of their goods. If 10% of their products fails CGA due to e.g. poor workmanship, they have to increase their price by 10% plus the cost of dealing with the problem. A Chinese seller can sell you any shoddy junk they like; once AliExpress's time limit has expired, you have no comeback.

Even if the goods are faulty when you receive them, the seller may insist you return them (at a cost much higher than the value of the goods) to get your refund.

[Edit:] The same applies to labour protection laws, health & safety laws, etc.

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