Government planning changes to GST levy on overseas purchases

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20173 posts

Uber Geek

#854425 12-Jul-2013 15:21

graemeh:
mattwnz: Why aren't business purchases covered by the CGA. The only difference in terms of cost of the product, is that business don't pay GST. Otherwise aren't businesses being treated unfairly ¿
Otherwise what pays for the cost of providing the CGA to NZ, and why would imported and business goods not be covered?

The importer/manufacturer and retailer bear the cost of providing the CGA so ultimately it is the end purchaser of the product or service that is paying for the CGA as the retailer will factor their CGA obligations into the price.

This is nothing to do with GST.

That is true, but that does mean that NZ businesses are subsidising the cost of providing the CGA to personal consumers, as they don't get products any cheaper than personal consumers, apart from it being GST exempt. Personally I think it should be visibly built into GST, so that people know that when they buy NZ goods and pay GST, that they get additional protection, which they don't get from buying overseas. The whole CGA thing is far to airy fairy and open ended, and many people don't actually understand it, or even know that they are covered by it. But it is a point of difference when buying locally, over buying from overseas.

sleemanj

1490 posts

Uber Geek

#854426 12-Jul-2013 15:22

mattwnz:

It does make me wonder what is stopping many NZ retailers setting up an online store themselves and basing their business overseas in a lower tax country, so people can buy online and not have to pay GST.

If they have any presence here in NZ, the IRD would come down on them like a ton of bricks.

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James Sleeman
I sell lots of stuff for electronic enthusiasts...

sleemanj

1490 posts

Uber Geek

#854428 12-Jul-2013 15:24

mattwnz:I think it should be visibly built into GST, so that people know that when they buy NZ goods and pay GST, that they get additional protection, which they don't get from buying overseas

Then people who imported over the threshold and thus got billed GST (and duty, and IETF) would say "why am I paying GST when I can't do anythig under the CGA because the vendor isn't subject to our laws"

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James Sleeman
I sell lots of stuff for electronic enthusiasts...

mattwnz

20173 posts

Uber Geek

#854431 12-Jul-2013 15:30

sleemanj:
mattwnz:I think it should be visibly built into GST, so that people know that when they buy NZ goods and pay GST, that they get additional protection, which they don't get from buying overseas

Then people who imported over the threshold and thus got billed GST (and duty, and IETF) would say "why am I paying GST when I can't do anythig under the CGA because the vendor isn't subject to our laws"

Yes, but then again, the government could argue that that part of the GST take, goes to help support the system here in NZ, and if people want to be covered by the CGA, they should buy locally. No tax system is perfect anyway, and many people who pay tax never get the benefit of those taxes they pay. eg our tax goes to pay for many services, which we may never use.

khull

1245 posts

Uber Geek

#854450 12-Jul-2013 16:16

I've been in situations where a product purchased from a local retailer has failed and had to return it - apart from spending hours trying to convince the retailer there was something wrong with the item and reproducing the problem in front of them (they'll have you think you are crazy first) I had to wait 6 week turnaround before I got a replacement item.

Fast forward to the same process on an Amazon purchase - went on the live chat, and got a replacement item sent (yes SENT) within 30 mins (shorter if I didn't account for the support person to answer the query) and a return label sent for the faulty item to send back to their warehouse.

Nothing directly to do with taxes at all - I'd happily pay for GST for this kind of service as well - trouble is now having to justify to customs that I have already paid for GST the first time round......

onecouch

39 posts

Geek

#854493 12-Jul-2013 18:00

sleemanj:

If they have any presence here in NZ, the IRD would come down on them like a ton of bricks.

On what basis? That they are NZ based and should therefore not be trying to help NZ consumers (and themselves) benefit from the law as it stands?

AU retailers have tried this - with varying degrees of success. See http://www.harveynormandirectimport.com/ Harvey Norman's effort as an example. The ATO doesn't seem to have paid them any extra attention as a result, nor have they changed the threshold from the current AUD$1000.

blakamin

4431 posts

Uber Geek
Inactive user

#854500 12-Jul-2013 18:17

onecouch:
sleemanj:

If they have any presence here in NZ, the IRD would come down on them like a ton of bricks.

On what basis? That they are NZ based and should therefore not be trying to help NZ consumers (and themselves) benefit from the law as it stands?

AU retailers have tried this - with varying degrees of success. See http://www.harveynormandirectimport.com/ Harvey Norman's effort as an example. The ATO doesn't seem to have paid them any extra attention as a result, nor have they changed the threshold from the current AUD$1000.

Except that HN Direct are the same price as the bricks and mortar store... In fact, COD black ops 2 is $0.17 more from direct and then you add delivery.

Sharesies

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sleemanj

1490 posts

Uber Geek

#854523 12-Jul-2013 18:59

onecouch:
sleemanj:

If they have any presence here in NZ, the IRD would come down on them like a ton of bricks.

On what basis? That they are NZ based and should therefore not be trying to help NZ consumers (and themselves) benefit from the law as it stands?

Well, provided the shipment is drop shipped directly to them and thus GST [can be if customs chooses to] collected at the border, then I agree that business model would likely be "ok" to not collect GST at time of purchase (indeed, doing so would be problematic since you would have an import coming in where GST had already been paid).

However, of course there is the "S" in GST. A counter argument could be made that they are providing a non-exempt service to the customer, and that a portion of the price which the customer pays to them is for that service.

Indeed, if it wasn't for that specific service of "saving you the GST" the business would likely not exist, so clearly it's a service they are providing, and if it's being provided by an NZ business to somebody in NZ, then GST applies to that service (with only a few exceptions).

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James Sleeman
I sell lots of stuff for electronic enthusiasts...

dman

953 posts

Ultimate Geek

#854986 13-Jul-2013 16:31

Banks don't want anything to do with it. http://www.kiwiblog.co.nz/2013/07/banks_say_no_to_being_gst_collectors.html?fb_source=pubv1

sleemanj:
TwoSeven:
What I was asking is that when NZ retailers import goods on a retail scale (rather than individually/privately as consumers do), are they subject to GST on the import as we consumers are.

GST registered businesses (almost all businesses are GST reg) are never effectively "subject to GST" for matters involving the GST entity, not on imports, not on anything. All GST that a GST registered entity pays while it is GST registered is refunded to them either by means of deduction from the GST they collect, or direct refund from the IRD if their GST paid exceeds the GST collected.

TwoSeven:
Realistically I don't see why we need the import tariff

There is no "import tariff". There is a duty on some goods, and there is GST. Customs only collects if it's worth custom's time to collect, commercial importers seldom import small enough quantities that it would not be worth collecting. If customs decides to collect duty/gst, then they also add a fee called the IETF.

Companies can't reclaim the IEFT however which sucks.

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JimmyH

2886 posts

Uber Geek

#855114 13-Jul-2013 23:21

TwoSeven:

Sorry, but I do know how GST works in NZ. Private imports can be subject to both an import duty and GST (on the NZ $ equiv. of the landed value).

From your comments, it's not clear that you do actually know how GST works. There are very few things that are subject to import duty as well as GST (footwear, clothing etc). And the rules are the same as GST, they apply to both business and personal importers - all people who import liable items have to pay unless the value of duties and GST in total is less than $50 - because it's not worth the cost of collection for the govt to chase it.

What I was asking is that when NZ retailers import goods on a retail scale (rather than individually/privately as consumers do), are they subject to GST on the import as we consumers are, or are there different import taxes that they pay instead.

If they are paying a flat 15% rate on imported goods and they need to also levy 15% sales tax then their prices that the consumer pays for low end goods are going to be significantly higher than that of an overseas producer who is not subject to the same tariffs.

Which is why I don't think you understand GST. Both businesses and private importers have to pay GST - on the same basis and at the same rate. It's a consumption tax, also known as a value added tax in some jurisdictions. If you are business, you then charge GST when you sell the item AND claim the GST you paid back as an offset against this. So GST doesn't compound the way you seem to imply it does. Also, I'm not sure where you are getting sales taxes from - sales tax was repealed when GST was introduced in the 1980s.

Realistically I don't see why we need the import tariff on goods at all if retailers have to pay it as it unfairly penalises them against the competition. Not having this tax, or perhaps even removing it for bulk imports (say above $10k or something like that) would allow them to compete with overseas purchases on a more level playing field. I think removing the tax or lifting the threshold would be easier to implement rather than the current proposals.

Given the way GST works, this doesn't make sense. What purpose would removing GST, but only on bulk imports, serve?

colinuu

246 posts

Master Geek

#856161 15-Jul-2013 22:13

I have no problem with being charged gst on low value imports if the government can find a way to do so economically. However, this will do nothing to save the local retailing industry.

Retailers have to wake up and stop taking the consumer for mugs. It has already been mentioned about how they don't emphasise the benefits of cga protection on goods bought locally, instead promoting expensive and unnecessary extended warranties as they try to milk the consumer for all they can get.

But blatant profiteering is what is most likely to bring about their demise. A kitchen aid, heavily promoted on tv sells locally for around $125. I have just received the same item from overseas, delivered to my door, for $22. If retailers were to charge around $35 to $40 like the sellers on trademe, they would probably move at least 10 times the quantity and still return a healthy profit. Adding gst to the privately imported cost would not make one iota of difference in cases like this, which are all too common.

matisyahu

1626 posts

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#857686 16-Jul-2013 20:48

Once again retailers wondering why people buy from overseas or online - I would purchase from a physically located store if the store could actually be bothered stocking the said product in stock. Multiple times I've been in a situation where I've wanted to purchase something and find that they have none in stock thus I have to wait. If you want to charge a premium for a physical store then you have to offer more than just 'advice' - such as actually having the product on the show room floor would be a good starter.

"When the people are being beaten with a stick, they are not much happier if it is called 'the People's Stick'"

Elpie

1304 posts

Uber Geek

#857807 17-Jul-2013 01:02

The retailers don't seem to get it that they can also be selling online, to overseas markets. With the relatively low NZ dollar, no GST on exports, and a time zone that works pretty well for fulfilling orders from the northern hemisphere, there are opportunities. It seems its much easier to complain about a few million local consumers than to look for a niche in a multi-million-strong market.

The government's proposal won't help NZ retailers but, then again, GST isn't about helping anything except government coffers anyway.

sleemanj

1490 posts

Uber Geek

#857809 17-Jul-2013 01:35

Elpie: The retailers don't seem to get it that they can also be selling online, to overseas markets.

There are problems with that in regard to shipping.

If NZ Post lifted their game in international outgoing mail services, reduced the price, and gave tracking numbers for economy mail, then maybe retailers could compete in a few sections of the marketplace, but otherwise they are working against the rest of the world's retailers, not just China but in the US and EU who can easily beat their shipping cost and transit time.

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James Sleeman
I sell lots of stuff for electronic enthusiasts...

Ragnor

8223 posts

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#857812 17-Jul-2013 03:06

Elpie: The retailers don't seem to get it that they can also be selling online, to overseas markets. With the relatively low NZ dollar, no GST on exports, and a time zone that works pretty well for fulfilling orders from the northern hemisphere, there are opportunities. It seems its much easier to complain about a few million local consumers than to look for a niche in a multi-million-strong market.

The government's proposal won't help NZ retailers but, then again, GST isn't about helping anything except government coffers anyway.

Selling what though? Hard to see how NZ retailers could sell overseas produced goods to overseas consumers competitively vs overseas retailers.

The stuff we do make here and export (dairy. forestry, merino, ice breaker etc etc) is already doing pretty well already, the type of retailers you're talking about don't sell that stuff. We also have digital goods/services like Xero being "exported" and tech stuff from companies like Rakon, F&P Healthcare etc but those don't help the type of retailers you're talking about either.

When the current trend plays out to it's logical extreme a lot of bricks and mortar retailers will be gone and there will likely be a bunch of charge per entry/access showrooms where you can see/try stuff that you then order online. Maybe a few high end niche stores too. It won't happen overnight but it will happen.

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