GST to be charged on purchases below $400

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#2006156 1-May-2018 17:35

Leaving aside the arguments regarding fairness, retail level playing fields, etc etc, how on earth would/could such a proposal work?

I really cannot believe that my Chinese or Taiwanese supplier of various dribs and drabs of computer gear (for example) will go to any effort whatsoever to register with the NZ Government or provide 'appropriate' specific documentation for NZ GST collection.

More unlikely is that they would subsequently report and remit funds so collected to NZ.

Also, with a purported $60,000 per year trading limit, I foresee a heap of 'trading names' ensuing (as they already do now on eBay etc), that will just be entities of a larger organisation that will come and go as the magical NZ$60,000 figure is approached.

Stupid, stupid, stupid !!

rayonline

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#2006158 1-May-2018 17:38

Talkiet:

Now unfortunately the retailers will begin complaining about something else

Overseas transactions blockade? Internet censorship?

Tzoi

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#2006163 1-May-2018 18:01

wratterus:

@Tzoi,

So let's say I buy an item from a random seller on AliExpress, worth say $140 NZD.

From my understanding, once this law comes into effect, I should be charged 15% on top of the $140 at the time of checkout, so I pay $161 to AliExpress, they ship the item. How will customs know that I have paid GST on that item? How will they contact me to confirm that? A letter?

And how do AliExpress pay that $21 of GST they have collected to our Government?

Are customs going to now look at every package? How can they possibly have the man power and funds to do that? If they don't, then surely there is potential for many items sent from 'unregistered' sellers to pass through with no tax charged on that item.

I can see why this has never been brought in before - because it's obviously a massive hassle. With them dropping the current fees, are they actually going to make anything off this? With the increased admin costs and whatever else needs to be put in place, surely this is just to stop the retailers complaining - it seems to me like it might actually cost money to enforce it!

And what about gifts?

Customs won't know whether you have paid GST on it, but because the declared value will be less than $400 it is not their remit to check.

AliExpress will be required to file GST returns quarterly I believe, paying the GST they have collected.

Unregistered sellers do not have to collect GST, nor is any GST due on that item. So Customs won't have to check any of these.

Problems will probably arise with people declaring items below $400 and not registering for GST, even though they may be above the threshold. NZ's tax system is based on 'voluntary compliance', so it may be hard for them to find out about this and chase. If they do, they can use the agreements they have in place with the foreign jurisdiction to get that overseas supplier to pay the GST and any penalties and interest that are required.

tdgeek

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#2006164 1-May-2018 18:10

wratterus:

@Tzoi,

So let's say I buy an item from a random seller on AliExpress, worth say $140 NZD.

From my understanding, once this law comes into effect, I should be charged 15% on top of the $140 at the time of checkout, so I pay $161 to AliExpress, they ship the item. How will customs know that I have paid GST on that item? How will they contact me to confirm that? A letter?

And how do AliExpress pay that $21 of GST they have collected to our Government?

Are customs going to now look at every package? How can they possibly have the man power and funds to do that? If they don't, then surely there is potential for many items sent from 'unregistered' sellers to pass through with no tax charged on that item.

I can see why this has never been brought in before - because it's obviously a massive hassle. With them dropping the current fees, are they actually going to make anything off this? With the increased admin costs and whatever else needs to be put in place, surely this is just to stop the retailers complaining - it seems to me like it might actually cost money to enforce it!

And what about gifts?

There needs to be a payment from Ali to IRD. Its not your problem. Why would Customs check every package for GST if it is known Ali collected it?

its not about making money, its about a level playing field.

There are a lot more admin costs for individual items than for collecting GST off suppliers. Amazon for example is one supplier, one payment per month conjured to a gazillion imports

What about gifts? If you buy a gift at Noel Leemings, do you pay GST?

Tzoi

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#2006165 1-May-2018 18:16

I think he is asking about a gift sent from a person overseas to a NZer that is over $400. It'll be the same as it is now, though I admit I don't actually know what happens currently

wratterus

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#2006166 1-May-2018 18:17

Thanks guys, yeah I think I was getting a bit of the wrong end of the stick, makes more sense now.

tdgeek

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#2006167 1-May-2018 18:18

9 pages in one day on GST, a tax we all pay for all our purchases. Now that it will cover overseas purchases (which it already does) its a conspiracy. Go around your home and look at every item you have, how many those are overseas purchases?

Perhaps ask this Govt and the nest to remove GST on overseas purchases? As that will cover a very large amount of items, we can perhaps look at sales taxes.....

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sbiddle

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#2006175 1-May-2018 18:30

I had to laugh at the woman on the radio this evening on Checkpoint talking about it. She was from a bookstore on Wellington and was happy about this happening - because people would look at her books for $60 and then buy them from Amazon or Book Depository for $30 and they'd not have to pay GST.

She just doesn't seem to get it does she? People who wouldn't buy a book from her for $60 previously aren't going to now just because they have to pay 15% GST on their $30 book.

tdgeek

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#2006185 1-May-2018 18:41

sbiddle:

I had to laugh at the woman on the radio this evening on Checkpoint talking about it. She was from a bookstore on Wellington and was happy about this happening - because people would look at her books for $60 and then buy them from Amazon or Book Depository for $30 and they'd not have to pay GST.

She just doesn't seem to get it does she? People who wouldn't buy a book from her for $60 previously aren't going to now just because they have to pay 15% GST on their $30 book.

Yes, the world is changing. Back in the day internet purchases were a drop in the proverbial bucket. In the future the brick and mortar sales will be the same. Today we are in transition. Book stores will fail as video stores have done. If I was a kid at school now, I'd get into the transport industry as moving goods is going to be the key industry. I laugh at NZ Post. Mail falling. So move to courier bigly, they didnt. Traditional retail will reduce, shipping will increase.

dafman

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#2006188 1-May-2018 18:47

networkn:

I am interested to know what happens with warranty replacements too?

My sister got pinged not only GST but inspection fees etc on a warranty replacement of a digital item a few years ago. She tried to talk to customs, but they refused to release the item until she paid.

Warranty issues in general with offshore purchases is one of the reasons I have always purchased any gadget of significant value locally knowing I have a local supplier and the CGA behind me.

GST is probably the least of your issues. Buyer beware.

tdgeek

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#2006193 1-May-2018 19:02

dafman:

networkn:

I am interested to know what happens with warranty replacements too?

My sister got pinged not only GST but inspection fees etc on a warranty replacement of a digital item a few years ago. She tried to talk to customs, but they refused to release the item until she paid.

Warranty issues in general with offshore purchases is one of the reasons I have always purchased any gadget of significant value locally knowing I have a local supplier and the CGA behind me.

GST is probably the least of your issues. Buyer beware.

Online is cheaper for obvious reasons. Brick and mortar is safer, also obvious.

Yes, caveat emptor applies.

Once this all plays out there will be equilibrium. Some products you have no choice but to buy online cos it ain't worth it to be a Kiwi retailer. Other stuff wiser to buy locally, and whine about the price.

Malls? Shopping centres? They wont have a lot of variety I feel.

evilengineer

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#2006202 1-May-2018 19:24

Geektastic: And the real reason is....

“The Government estimates the proposal will be able to collect $53 million in revenue in 2019/20, $78 million in 2020/21 and $87 million in 2021/22.”

Nothing to do with the unicorn of fairness.

But plenty to do with arresting the steady erosion of Treasury income as purchases shift online, though.

To be fair to the Government, every $60 local purchase that shifts to a $30 online purchase still means less GST revenue overall. Even if it does get collected.

Those schools and hospitals ain't going pay for themselves.

Seems to me that the political costs of this "new tax" are fairly low.

It chucks local retailers a bone, most people who've been paying attention for the last three years were kind of expecting it anyway and National can't complain too loudly without coming across as total hypocrites (wouldn't be the first time.)

tdgeek

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#2006207 1-May-2018 19:34

evilengineer:

Geektastic: And the real reason is....

“The Government estimates the proposal will be able to collect $53 million in revenue in 2019/20, $78 million in 2020/21 and $87 million in 2021/22.”

Nothing to do with the unicorn of fairness.

But plenty to do with arresting the steady erosion of Treasury income as purchases shift online, though.

To be fair to the Government, every $60 local purchase that shifts to a $30 online purchase still means less GST revenue overall. Even if it does get collected.

Those schools and hospitals ain't going pay for themselves.

Seems to me that the political costs of this "new tax" are fairly low.

It chucks local retailers a bone, most people who've been paying attention for the last three years were kind of expecting it anyway and National can't complain too loudly without coming across as total hypocrites (wouldn't be the first time.)

Agree, its just evolution. Sakes taxes were messy. GST is easy, but its regressive. Harder now with obscure online sellers. End of the day the Govt needs taxation, just as we need personal income. If things change, other things need to change with it.

How about this? GST is a consumption tax. What about a tax on bank transactions? If you get money into your bank, i.e. salary, its not tax as is the case now. If you transfer finds to savings, its not taxed as is the case now. If you save, no tax, same as now. If you spend its taxed. The end goal is same revenue but much less admin.

No tax invoices, no GST returns. A business? Sae, pay tax on bank transactions that are spending as compared to transferring to assets or liabilities.

sbiddle

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#2006237 1-May-2018 20:15

dafman:

networkn:

I am interested to know what happens with warranty replacements too?

My sister got pinged not only GST but inspection fees etc on a warranty replacement of a digital item a few years ago. She tried to talk to customs, but they refused to release the item until she paid.

Warranty issues in general with offshore purchases is one of the reasons I have always purchased any gadget of significant value locally knowing I have a local supplier and the CGA behind me.

GST is probably the least of your issues. Buyer beware.

If you're sending an item back for something like a warranty claim you need to follow proper process and paperwork for export. You then won't need to pay when it comes back.

rayonline

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#2006242 1-May-2018 20:20

One time I sent a Nikon digital SLR back to Japan for warranty. I went to the customs office, they witnessed it and fill out a form for me stamped, signed with the serial number. I sent to Japan, they left the form in the box and sent it back to me. I also had a copy with me at home.

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