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GST changes: Q&As for New Zealand GST-registered businesses

An image brown cardboard boxes on shelves. The text to the left reads "Buying goods from overseas?"

GST changes: Q&As for New Zealand GST-registered businesses

An image brown cardboard boxes on shelves. The text to the left reads "Buying goods from overseas?"

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Need help?

If you have questions, email us at info.lvg@ird.govt.nz

For information about Customs' charges email feedback@customs.govt.nz

General questions

How is GST charged on imported goods from now until 1 December 2019?

Customs collects 15% GST and tariff duty on imported items when parcels arrive at the New Zealand border. They do this when the total amount of GST and tariff duty on the purchase equals NZ$60 or more. This threshold does not apply to most tobacco products and alcoholic beverages.

 

What’s changing?

From 1 December 2019 overseas businesses must collect GST on low-value goods (goods valued at NZ$1,000 or less each) supplied to consumers in New Zealand if they meet our GST registration requirements.

Overseas suppliers include:

  • sellers, retailers and merchants that sell directly to New Zealand consumers
  • online marketplaces through which businesses sell goods and services
  • redeliverers that offer mailbox redelivery and personal shopping services from other countries.

Goods imported into New Zealand valued over NZ$1,000 each (high-value goods) and all tobacco products and alcoholic beverages will continue to have GST and duties applied at the border.

 

Why is the New Zealand Government making these changes?

New Zealand retailers include GST in the price of their goods, collect this GST, and pay it to Inland Revenue.

Right now, GST is not collected on all goods purchased online from overseas. That’s because the cost of collecting less than NZ$60 in GST and duties at the border is not cost effective.

Government is introducing an offshore supplier registration system that requires overseas businesses to collect GST on low-value goods sold to New Zealand consumers at the point of sale.

This change will help level the playing field for New Zealand businesses. With the steady growth in online shopping, it will also stop a significant amount of tax revenue from being lost.

 

What do other countries do?

There are no global guidelines for collecting GST or similar taxes on low-value imported goods.

However New Zealand’s new rules are similar to the rules introduced by Australia in July 2018.

The European Union (EU) has committed to collecting Value Added Tax (VAT) on imported goods from sellers outside the EU from 1 January 2021.

 

Who is a consumer?

A consumer for these rules is a person who buys low-value goods that are delivered to New Zealand, and:

  • is not registered for New Zealand GST; or
  • is registered for GST and uses the low-value goods wholly for personal use.

 

Do all overseas suppliers have to charge New Zealand GST?

No. Overseas businesses who do not meet our NZ$60,000 registration threshold are not required to register for GST in New Zealand. This means consumers may not pay GST on all goods they import.

 

Impacts for New Zealand GST-registered businesses

How will the changes affect New Zealand GST-registered businesses?

Low-value goods sold by overseas suppliers to GST-registered businesses in New Zealand for use in their business (business-to-business supplies) are generally excluded under the new rules. That’s because businesses can claim back GST on these purchases, so we would just end up paying back any GST that had been collected.

However, some suppliers may opt to collect GST on low-value goods supplied to GST-registered New Zealand businesses if they meet the criteria that allows this. They must issue a tax invoice which will allow the New Zealand business to claim back the GST.

If a New Zealand business imports goods in a consignment valued above NZ$1,000 from an overseas supplier, they'll continue to pay GST and duty on these goods at the border.

However, Customs will not collect GST on low-value goods in parcels or consignments valued over NZ$1,000 if it receives documentation that shows GST has already been collected by an overseas supplier, marketplace or re-deliverer.

 

Can overseas businesses charge GST on high-value goods purchased by New Zealand GST-registered businesses?

No, they should not charge GST on high-value goods purchased by New Zealand GST-registered businesses. In certain circumstances they can charge GST on high-value goods supplied to New Zealand consumers only.

If an overseas supplier accidentally treats you as a consumer and charges GST on high-value goods, the overseas supplier is responsible for refunding the GST to you. You're unable to claim back the GST in your GST return.

The overseas supplier is not allowed to issue a tax invoice for supplies over NZ$1,000 (excluding GST).

 

Buying goods from overseas using a New Zealand based online marketplace or redeliverer

Online market places and redeliverers who are New Zealand tax residents are also subject to these new GST rules. However, the business-to-business exclusion does not apply to them – this exclusion only applies to overseas suppliers (ie suppliers that are non-resident for New Zealand tax purposes).

This means, New Zealand-resident online marketplaces and redeliverers are required to charge GST on supplies of low-value goods to New Zealand GST-registered businesses.

In addition, these online marketplaces and redeliverers can elect to charge GST on high-value goods if they meet the criteria to do this.

 

How will overseas businesses know not to charge GST on my purchases?

The overseas supplier will treat you as a consumer unless you inform them, you’re a GST-registered business or provide them with your GST number or New Zealand Business Number.

 

How will I get the GST back if I’m charged at the time of purchase?

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 is responsible for refunding the GST to you. You're unable to claim back the GST in your GST return instead, unless the overseas supplier provides you with a full tax invoice and the value of the supply (excluding GST) is NZ$1,000 or less.

 

What happens when an order is cancelled, or goods are returned?

If you return a purchase to an overseas business, or your order is cancelled after you have paid, the overseas business is responsible for refunding to you any GST you paid at the point of sale.

If the overseas supplier issued a tax invoice and you’ve already claimed the GST in your return, you will need to make an adjustment in your next return to repay this amount to us.

 

What is the GST treatment for goods purchased for both business and private use?

Where a GST-registered business purchases goods from an overseas supplier for both business and private use, and where no GST has been charged by the overseas supplier or Customs, then a special rule (known as the “reverse charge”) may apply.

The GST-registered New Zealand business must return and pay GST on the goods in their GST return if the private use of the goods (or exempt use) is more than 5%.

If their private use of the goods (or use of the goods in making GST-exempt supplies) is 5% or less, then they won’t need to return GST under the reverse charge.

For more information about the reverse charge including an example, see page 70 of the Special Report.

 

Charges at the border

What charges can I expect at the border?

Items and consignments with a combined value exceeding NZ$1,000 will have the following charges applied at the border:

  • GST (if it hasn’t already been collected by the overseas supplier, marketplace or redeliverer)
  • tariff duty (if the items attract duty)
  • an import entry transaction fee (IETF)
  • a biosecurity system entry levy (BSEL).

If GST on the value of any items has already been collected by the supplier, GST will still be payable on any tariff duty payable.

Tariff duty will be charged on all individual items (of low or high-value) that attract duty if they arrive in a consignment valued over NZ$1,000.

 

  Price paid before GST, shipping and insurance Import Entry Transaction Fee and Biosecurity System Entry Levy Tariff Duty including GST (if a dutiable item) GST charged by Customs on the value of the good/items including shipping and insurance

One good

NZ$1,000 or less

No

No

No

One good

Over NZ$1,000

Yes

Yes

Yes

Multiple items from same supplier

Combined value of NZ$1,000 or less

No

No

No

Multiple items valued NZ$1,000 or less from same supplier

Combined value over NZ$1,000

Yes

Yes

Yes - if not already collected by the supplier

Multiple items (mix of low and high-value) from same supplier

Combined value over NZ$1,000

Yes

Yes

Yes - only on items where GST hasn't already been collected by the supplier

Multiple items from same supplier arriving in separate parcels but treated as one consignment

Combined value NZ$1,000 or less

No

No

No

Multiple items from same supplier arriving in separate parcels but treated as one consignment

Combined value over NZ$1,000

Yes

Yes

Yes - only on items where GST hasn't already been collected by the supplier

Multiple items from different suppliers arriving in one consignment (e.g. via a redeliverer)

Combined value NZ$1,000 or less

No

No

No

Multiple items from different suppliers arriving in one consignment (e.g. via a redeliverer)

Combined value over NZ$1,000

Yes

Yes

Yes - only on items where GST hasn't already been collected by the supplier

 

Need help?

If you have questions, email us at info.lvg@ird.govt.nz

For information about Customs' charges email feedback@customs.govt.nz