Proposed GST changes for low value goods

Wednesday 9 May 2018

Authors: Willy Sussman and Campbell Pentney

​Interested parties should pay attention to the Government’s call for submissions on proposals to lower the threshold at which offshore purchases become liable for GST, with decisions yet to be made on a number of aspects. ​

Details of the proposed changes were announced last week. However, the proposal is not finalised and officials are seeking submissions on a number of technical issues, including how best to deal with:

  • 'Re-deliverers' who provide overseas delivery addresses and then resend to New Zealand;

  • 'electronic marketplaces', that act as gateways for the sale of goods on behalf of a large number of vendors;

  • multiple goods included in a single order;

  • how customers should be identified as GST registered businesses (and therefore not subject to the new rules); and

  • possible sanctions and measures to bolster compliance.

At present, GST and import duties are not collected where the total tax would be less than NZ$60. Where the amount of tax collected is NZ$60 or more, the importer is then required to account for this to New Zealand Customs, along with various administrative charges. Not collecting tax on low value imports has led to a perceived imbalance between the treatment of goods purchased overseas compared with those bought locally. 

It might be expected that non-resident sellers will increase their prices to pass the tax cost to customers, so the proposal is likely to make online shopping from overseas  more costly for New Zealand consumers.

Generally, the changes are similar to the position recently adopted by Australia and are also comparable to the recent 'Netflix tax' that expanded the scope of GST to cover 'remote' services provided by non-residents. Key features of the new proposals are:

  • proposed changes would take effect from 1 October 2019;

  • imports valued at NZ$400 or less would be subject to the new rules. The old rules will apply to higher valued imports;

  • non-resident suppliers generating NZ sales of NZ$60,000 or more will be required to register and pay GST on low value sales;

  • suppliers will be able to rely on a New Zealand delivery address as evidence a customer is a New Zealand resident;

  • supplies to GST registered businesses will not generally be subject to GST; and

  • non-resident suppliers will not need to return tariffs / customs duties.

The closing date for submissions is 29 June 2018. 

If you have any questions regarding any issue raised above, please contact one of our team or your usual Bell Gully adviser.


Disclaimer

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • Willy Sussman

    Partner Auckland
  • Campbell Pentney

    Senior Associate Auckland
Related areas of expertise
  • Goods and Services Tax
  • Tax
  • International