GST to be charged on purchases below $400

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#2055258 12-Jul-2018 18:36

SirHumphreyAppleby:

rugrat:

Looks like the ATO is going to be busy in Australia. Even an Amazon one in there that shipped without GST.

Story here

Strict rules of sovereignty should be maintained. I'd like to think most foreign courts would tell the ATO where to go if they tried to persecute a legal entity operating outside of Australia, but I am reminded of this example...

https://www.youtube.com/watch?v=d-7o9xYp7eE&t=280

New Zealand should take the lead here and specifically legislate against foreign nations attempting to impose obligations on us. That's not what will happen however. Eventually there will be reciprocal agreements, and we'll all be forced to pay taxes everywhere. The practical aspect of such things may come later, but until then, it'll be a horrible burden on businesses. It's certainly caused me to re-evaluate my plans.

Its a local tax, been around for ages. Or, when online sales really ramp up, GST will drop, so lets whip up Income Tax for the difference. OR continue with GST as has been the case forever. Most of our purchases are imported, no matter how or where you buy from.

SirHumphreyAppleby

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#2055260 12-Jul-2018 18:42

tdgeek:

Its a local tax, been around for ages. Or, when online sales really ramp up, GST will drop, so lets whip up Income Tax for the difference. OR continue with GST as has been the case forever. Most of our purchases are imported, no matter how or where you buy from.

Clearly you missed the point. I'm talking about other countries imposing their taxes on us, not us imposing taxes on our citizens. As for the collection, I completely disagree with how they are going about it, but that's a separate matter.

Tzoi

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#2055307 12-Jul-2018 19:58

I mean, technically, IRD will be imposing a tax on NZ consumers, just they're forcing overseas companies to collect it.

tdgeek

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#2055479 13-Jul-2018 07:07

SirHumphreyAppleby:

tdgeek:

Its a local tax, been around for ages. Or, when online sales really ramp up, GST will drop, so lets whip up Income Tax for the difference. OR continue with GST as has been the case forever. Most of our purchases are imported, no matter how or where you buy from.

Clearly you missed the point. I'm talking about other countries imposing their taxes on us, not us imposing taxes on our citizens. As for the collection, I completely disagree with how they are going about it, but that's a separate matter.

Other countries do impose taxes on us, been going on forever. Tariffs.

SirHumphreyAppleby

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#2055489 13-Jul-2018 07:36

tdgeek:

Other countries do impose taxes on us, been going on forever. Tariffs.

Tariffs apply to imports, and are usually paid by the importer - either a business or person, operating within the country to which the goods are imported. The government has a right to charge those tariffs in that case, just as they have the right to charge local taxes on them, even if not realised, as has been the case with GST on low value items in the past.

Nothing gives the ATO any right to impose penalties and garnish bank accounts of foreign entities as they claim they will be pursuing through foreign courts. They will look for loopholes, and once they find one, exploit the crap out of it for their own gain. Governments should clarify the position of through legislation in their own countries, and prevent endless court battles over money they traditionally have no right to claim from anyone other than their own citizens.

tdgeek

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#2055490 13-Jul-2018 07:45

SirHumphreyAppleby:

tdgeek:

Other countries do impose taxes on us, been going on forever. Tariffs.

Tariffs apply to imports, and are usually paid by the importer - either a business or person, operating within the country to which the goods are imported. The government has a right to charge those tariffs in that case, just as they have the right to charge local taxes on them, even if not realised, as has been the case with GST on low value items in the past.

Nothing gives the ATO any right to impose penalties and garnish bank accounts of foreign entities as they claim they will be pursuing through foreign courts. They will look for loopholes, and once they find one, exploit the crap out of it for their own gain. Governments should clarify the position of through legislation in their own countries, and prevent endless court battles over money they traditionally have no right to claim from anyone other than their own citizens.

I believe that the ability for overseas companies to charge GST has always been in place, but there was no mechanism in place, and the volume was extremely small, so that was mainly covered by thresholds, where the person importing had to pay GST. Now, the Govt could just enforce that to zero threshold, but thats a poor solution. Us having to go to collect a pair of Chinese socks from a central point. It seems far easier to have Amazon for example add GST to their billing system and transfer one payment per month.

SirHumphreyAppleby

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#2055494 13-Jul-2018 07:59

tdgeek:

I believe that the ability for overseas companies to charge GST has always been in place, but there was no mechanism in place, and the volume was extremely small, so that was mainly covered by thresholds, where the person importing had to pay GST. Now, the Govt could just enforce that to zero threshold, but thats a poor solution. Us having to go to collect a pair of Chinese socks from a central point. It seems far easier to have Amazon for example add GST to their billing system and transfer one payment per month.

The ability to do something, and the legal obligation in their own sovereign state are two completely different things.

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#2055499 13-Jul-2018 08:07

Ok. I assume that everyone is happy to pay GST, as its an NZ consumption tax that we have been paying forever as part of the Govt revenue streams so that they can run our country. But its too hard to charge it item by item upon arrival at the border and expect everyone to pick up small parcels from a central point, and its not right to ask overseas companies to collect for us. How do we make up for this shortfall? All I can think of is to increase GST for everyone by the amount that is personally imported and not charged. Then everyone starts subsidising small personal imports.

We are all happy to pay this old tax, but we are not interested in todays high tech world of making it happen easily?

SirHumphreyAppleby

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#2055505 13-Jul-2018 08:32

tdgeek:

We are all happy to pay this old tax, but we are not interested in todays high tech world of making it happen easily?

What's easy about it?

Every business exporting anywhere in the world would potentially have to file tax returns in dozens of countries attempting to impose their taxes on other states. I already have to file tax returns in both New Zealand and Australia, and require the services of accountants in both countries to do so. How many small businesses could afford to hire a specialist tax firm just to ensure their taxes are even completed in another country, let alone correct? Even local tax experts cost a small fortune, and I know that form experience. These costs have to be passed on, to everyone.

What happens if the tax you thought was paid isn't paid correctly? Penalties (75% in the case of the ATO), plus costs fighting the bill.

What happens if you ignore the tax? The ATO and potentially every other country around the world start looking for loopholes to get their 'fair' share. It will bankrupt businesses fighting those fights. The ATO won't care. They will literally spend millions of dollars fighting Amazon and other organisations, and may well eventually by told by the US Supreme Court where to go - unless they find their Honduran puffer fish.

The smart move would be for countries to close the loophole - explicitly state in legislation if their residents are liable for foreign tax. That would shut down the ATO (or similar) fishing expeditions, but would do nothing to reduce the administrative costs unless they decided that foreign imposed taxes cannot be upheld.

IF taxes are to be collected on behalf of other countries, it needs to be simple, with reciprocal agreements. Taxes need to be paid initially to the tax authority in your own country, submitting a single tax return, and the distribution handled by the government, not individual businesses.

tdgeek

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#2055542 13-Jul-2018 08:47

SirHumphreyAppleby:

tdgeek:

We are all happy to pay this old tax, but we are not interested in todays high tech world of making it happen easily?

What's easy about it?

Every business exporting anywhere in the world would potentially have to file tax returns in dozens of countries attempting to impose their taxes on other states. I already have to file tax returns in both New Zealand and Australia, and require the services of accountants in both countries to do so. How many small businesses could afford to hire a specialist tax firm just to ensure their taxes are even completed in another country, let alone correct? Even local tax experts cost a small fortune, and I know that form experience. These costs have to be passed on, to everyone.

What happens if the tax you thought was paid isn't paid correctly? Penalties (75% in the case of the ATO), plus costs fighting the bill.

What happens if you ignore the tax? The ATO and potentially every other country around the world start looking for loopholes to get their 'fair' share. It will bankrupt businesses fighting those fights. The ATO won't care. They will literally spend millions of dollars fighting Amazon and other organisations, and may well eventually by told by the US Supreme Court where to go - unless they find their Honduran puffer fish.

The smart move would be for countries to close the loophole - explicitly state in legislation if their residents are liable for foreign tax. That would shut down the ATO (or similar) fishing expeditions, but would do nothing to reduce the administrative costs unless they decided that foreign imposed taxes cannot be upheld.

IF taxes are to be collected on behalf of other countries, it needs to be simple, with reciprocal agreements. Taxes need to be paid initially to the tax authority in your own country, submitting a single tax return, and the distribution handled by the government, not individual businesses.

It is simple. Billing systems add various items to a bill, a tax is no issue. You don't need accountants and tax lawyers to do this, the billing system does it. End of the month, one GST return is printed out, the funds transferred to one bank account. Its simple, it already happens here. It can be but doesnt have to be reciprocal. If NZ companies export goods to individuals in the UK, then we can collect the VAT if so required, its no different. How can a Govt manage distribution if you say its too hard for the local business to do that? Its just a line item on an invoice.

Close the loophole, so that residents are liable for foreign tax. Yes, can do that. I order $5 Chinese socks, they arrive, Govt has to tell me, I drive to the collection point, wait in line behind 400 others, pay the 75c, plus the admin fee of $10 to fund all this brick and mortar operation.

Or, forget GST on personal imports and fund that lost GST from others

Pumpedd

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#2055572 13-Jul-2018 09:30

Its simple really, these large international countries will stop shipping to NZ. We are way too small for them to worry about paying tax...easier to not sell to us.

This government is all about tax collection at any cost. So sad. I detest them and all their lies.

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#2055580 13-Jul-2018 09:38

Tzoi:

I mean, technically, IRD will be imposing a tax on NZ consumers, just they're forcing overseas companies to collect it.

Technically they are asking overseas companies to collect it, as I cannot see a legal method for them to force companies domiciled overseas to do anything at all.

IMV it would make more sense to increase the GST personal import limit and continue to collect it at the border as now. They could easily and effectively do this by removing shipping costs from the calculation, which is logical as well because 90% of the shipping 'service' takes place outside New Zealand anyway. Or they could just raise the limit to a more sensible level - say $750.

JimmyH

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#2055606 13-Jul-2018 10:12

tdgeek:

We are all happy to pay this old tax, but we are not interested in todays high tech world of making it happen easily?

It depends on who you mean by "we", and it's not one simple change to a billing system.

While no one is exactly happy to pay tax, I think that having a broad-based tax with few to no loopholes and minimal distortion is the way to go, and on that basis I'm willing to agree that GST should be charged on personal imports. From a NZers perspective if they can make this happen in a way that is easy, has low compliance hassles, and raises materially more for the Government than it costs to collect then I agree that the Government should do this.

However, Amazon and other large retailers aren't in NZ and don't have the same interests. I can understand why they don't want the hassle and expense of being the NZ government's tax collector. And I also understand that. If I was in their shoes I wouldn't want the hassle of updating and maintaining a billing system in a way that accommodated the quirks and complexities of all of the hundreds of jurisdictions (countries, states, provinces and/or cities) my billing system to also accommodate their tax codes. It could turn into the IT/compliance project from hell, and need legions of tax lawyers, coders and testers to keep it up to date and working.

The reality is that if I was in their position, I would probably simplify things by accommodating larger countries/markets where it was commercially painful to lose all the customers, and deal with smaller countries like NZ by simply refusing to ship there on the basis that the sales weren't worth the hassle. And it is a sellers right to simply refuse to serve us.

While I wouldn't be too upset about having to pay GST, I would be upset about losing access to the world market (Amazon, eBay, Aliexpress, Bangood etc). Probably enough to change my voting behaviour over it.

tdgeek

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#2055705 13-Jul-2018 13:04

Geektastic:

Tzoi:

I mean, technically, IRD will be imposing a tax on NZ consumers, just they're forcing overseas companies to collect it.

Technically they are asking overseas companies to collect it, as I cannot see a legal method for them to force companies domiciled overseas to do anything at all.

IMV it would make more sense to increase the GST personal import limit and continue to collect it at the border as now. They could easily and effectively do this by removing shipping costs from the calculation, which is logical as well because 90% of the shipping 'service' takes place outside New Zealand anyway. Or they could just raise the limit to a more sensible level - say $750.

The issue is getting the GST collected on all consumed purchases, your suggestion does the opposite.

tdgeek

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#2055707 13-Jul-2018 13:10

JimmyH:

tdgeek:

We are all happy to pay this old tax, but we are not interested in todays high tech world of making it happen easily?

It depends on who you mean by "we", and it's not one simple change to a billing system.

While no one is exactly happy to pay tax, I think that having a broad-based tax with few to no loopholes and minimal distortion is the way to go, and on that basis I'm willing to agree that GST should be charged on personal imports. From a NZers perspective if they can make this happen in a way that is easy, has low compliance hassles, and raises materially more for the Government than it costs to collect then I agree that the Government should do this.

However, Amazon and other large retailers aren't in NZ and don't have the same interests. I can understand why they don't want the hassle and expense of being the NZ government's tax collector. And I also understand that. If I was in their shoes I wouldn't want the hassle of updating and maintaining a billing system in a way that accommodated the quirks and complexities of all of the hundreds of jurisdictions (countries, states, provinces and/or cities) my billing system to also accommodate their tax codes. It could turn into the IT/compliance project from hell, and need legions of tax lawyers, coders and testers to keep it up to date and working.

The reality is that if I was in their position, I would probably simplify things by accommodating larger countries/markets where it was commercially painful to lose all the customers, and deal with smaller countries like NZ by simply refusing to ship there on the basis that the sales weren't worth the hassle. And it is a sellers right to simply refuse to serve us.

While I wouldn't be too upset about having to pay GST, I would be upset about losing access to the world market (Amazon, eBay, Aliexpress, Bangood etc). Probably enough to change my voting behaviour over it.

GST returns are two totals. GST Collected and GST Paid as per the Balance Sheet. NZ businesses do it, Netflix does it, Apple does it. It is a simple change to a Billing system, its two codes for two Balance Sheet items. It just seems that the real issue is we dont want to pay more for overseas purchases. Money, the a same old issue. And as quoted somewhere recently here its another Govt tax, so its a tax fetish, or I dont want to pay any more tax. Get the Govt to reduce tax across the board, they can do that and reduce expenditure as well, everyone is happy. I just cannot see the issue when I get charged GST on an ice cream but not on Chinese socks

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