GST to be charged on purchases below $400

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timmmay

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#233744 1-May-2018 07:32

Quoted from NZHerald article:

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"The Government is set to announce further measures today to collect 15 per cent GST on low-value goods bought by Kiwis online from overseas, a so-called "Amazon tax."

The tax will be on anything under $400. Anything above $400 already attracts duties.

It follows on from the "Netflix tax" which started in October 2016 and which required foreign providers to levy GST on digital services sold to New Zealanders including Netflix, Spotify, iTunes, Kindle, online games and software."

While the tax will be paid by the foreign firms selling the goods the cost would inevitably be passed on to the buyer in the form of increased prices.

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Stuff says "That would see import duty and biosecurity fees on low value goods axed, softening the blow for consumers.".

It looks like the providers will collect the tax, so hopefully shipments aren't delayed by a slow customs service. While annoying, online purchases will still often be miles cheaper than local purchases, so it's really just a revenue gathering exercise.

I wonder what the real rate of tax is in NZ, when you take into account ACC levys, petrol tax, GST, etc.

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Benjip

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#2005856 1-May-2018 11:59

This could be good news, looks as if they're scrapping the customs & biosec fees:

"GST is collected at the border for goods over $400. We propose making offshore suppliers collect GST on low value goods at the moment of sale, and in turn, buyers of these goods will no longer pay Customs tariffs or border security and biosecurity fees.

"This will simplify compliance and administration costs at the border. This supports the focus of Customs to make cross-border transactions easier without compromising the need to keep out illicit substances and materials."

Taken from https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12042753

Tzoi

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#2006145 1-May-2018 16:56

Hi all, I've read all the discussion documents and papers released as part of my work so I can give a bit of an overview as to some of the questions you guys have had:

Suppliers are required to register for GST if they make supplies to NZ of over $60k a year (excluding business to business sales which would not be subject to the GST if the recipient business is GST-registered), similar to domestic suppliers and those subject to the 'Netflix tax'. A company that sells $60k worth of goods to NZers would probably comply because that would be a significant amount of revenue they would be giving up if they didn't comply and stopped shipping to NZ
If the recipient is GST-registered and provides that number to the supplier, then the supplier does not have to charge GST or can choose to zero-rate it (which would allow the supplier to claim input tax if it has any).
If the suppliers do not meet that threshold, they do not need to register for GST and you will not be charged GST on purchases from them. This is similar to suppliers in NZ who don't meet the threshold, though generally they will register to claim input tax.

GST will still be collected on goods over $400 under the current system for supplies from both GST-registered suppliers and unregistered suppliers. This is rather confusing as GST-registered overseas suppliers will only have to collect GST on goods under $400, with no GST on ones above that threshold, leaving it to Customs to charge it. However, it is only if individual goods are over this threshold. My understanding is if you buy a bunch of goods which in total are more than this threshold then the supplier will still charge the GST, not Customs.

"Marketplaces" and "re-deliverers" will be required to register for GST if they facilitate sales or forward sales of over $60k. This will catch Amazon, Aliexpress, and freight-forwarders etc.

IRD notes they have no real way of enforcing compliance, similarly to the the 'Netflix tax', however many large companies comply because it looks better for them (while a lot of people allege that these companies don't pay tax, generally they do pay tax, just potentially not enough - if they don't pay this it would be more akin to actual evasion and look worse), and NZ does have agreements with most major trading partners for assistance in collection of GST. Penalties and interest will apply too.

Let me know if you have any other questions and I will try and address them.