GST to be charged on low value imported goods

Date: 14th May 2019

Since 2016, GST has been collected on online services and intangibles bought from overseas such as software downloads, e-books, legal and accounting advice, and streamed movies and music. Now the government is considering new GST rules that would require overseas businesses to register for, collect and return goods and services tax (GST) on low-value goods sold to consumers in New Zealand.

shopping online from tablet

 

Currently New Zealand Customs collects GST and tariff duty at the border on goods bought from overseas. Customs does not collect GST and tariff duty on goods when the amount due is less than $60 (except on most alcohol and tobacco products). If they did, it would cost more for the administration and collection than what they collect.

What’s are the changes?

The rule changes aim to ensure GST is collected and paid on all goods bought online by consumers in New Zealand.

If approved, the new rules will apply to goods valued at NZD$1,000 or less (excluding GST) from 1 October 2019. Examples of these types of goods include books, clothing, cosmetics, shoes, sporting equipment and small electronic items.

New Zealanders will not pay tariff duty, an import entry transaction fee, or a biosecurity system entry levy if the total value of the parcel or consignment is $1,000 or less. Customs will continue to collect these, and GST, if the value is over $1,000.

The proposed changes are expected to become law in June or July this year.

What does this mean for overseas businesses?

Overseas businesses, online marketplaces, and redeliverers* would be required to register for GST if their total taxable supplies of goods and services to New Zealand:

  • was $60,000 or more in the last 12 months, or
  • will exceed $60,000 in the next 12 months.

*A redeliverer is a person or business that provides the use of an overseas delivery address for consumers purchasing goods from offshore suppliers.

What does this mean for NZ businesses purchasing from overseas?

Goods sold to GST-registered New Zealand businesses for use in their business are excluded under the proposed rules. That’s because businesses can claim back GST on these purchases, so you would just end up being paid back any GST that had been collected.

However, if goods are imported by a New Zealand business in a consignment valued above NZ$1,000, the business would pay GST and duty on these goods at the border.

If an overseas supplier accidentally treats a GST-registered business as an individual consumer and charges GST on low-value imported goods, the overseas supplier would be responsible for refunding the GST to you. You would be unable to claim back the GST in your GST return unless the overseas supplier provides you with a full tax invoice instead and the value of the supply (excluding GST) is NZ$1,000 or less.

More information

FAQs on new GST rules

‘Netflix tax’: GST on online services



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