The Government has launched proposals for offshore suppliers of low-value goods to New Zealand consumers to collect and return GST on those goods. The Government is to close a loophole that gives offshore companies an advantage by not requiring them to collect GST on all goods sold to local consumers.
From 1 October 2019:
Offshore suppliers would be required to register, collect, and return New Zealand GST on goods valued at or below $400 supplied to New Zealand consumers.
The rules would apply when the good is outside New Zealand at the time of supply and is delivered to a New Zealand address.
Offshore suppliers would be required to register when their total supplies of goods and services to New Zealand exceed $60,000 in a 12-month period. In certain circumstances, marketplaces and re-deliverers may also be required to register.
Tariffs and border cost recovery charges would be removed from goods valued at or below $400.
The current processes for collecting GST and other duty at the border by Customs will continue to apply for goods valued over $400.
The current border processes for managing risks in relation to imported goods, including biosecurity assessment, will remain in place.
How will the proposed changes affect consumers?
GST will be charged at the point of sale when the value of the goods is $400 or less. In some cases consumers will pay more for their goods but in some cases goods will be cheaper because of the removal of Customs tariffs, border security fees and biosecurity cost recovery charges. There is no change to the tax treatment of goods valued above $400, where the current process for collecting GST and tariff duty at the border will continue.
Cristina Canard is the principal accountant at Apex Accountancy Ltd. Cristina keeps up to date with all the relevant tax changes in New Zealand.