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GST changes: Q&As for NZ consumers

An image of a lady with a brown cardboard box. The text to the left reads "Buying goods from overseas?"

GST changes: Q&As for NZ consumers

An image of a lady with a brown cardboard box. The text to the left reads "Buying goods from overseas?"

General questions

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

Customs will collect 15% GST and tariff duty on imported items, including anything bought online from overseas, where the total amount of GST and tariff duty on the purchase equals NZ$60 or more. This threshold does not apply to most alcohol or tobacco. Customs collects any GST due when parcels arrive at the New Zealand border.

 

What’s changing?

What we mean when we say ‘low-value imported goods’ is changing. Most goods bought from overseas and individually valued at NZ$1,000 or less will be considered low-value imported goods and will have GST collected by the overseas supplier at the point of sale.

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.

 

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 the New Zealand 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.

 

Do these changes apply to online shopping only?

No. Consumers in New Zealand will pay GST on any goods valued at or below NZ$1,000 when they place an order online, by mail order or phone with a registered overseas supplier.

 

These goods are not made or sold in New Zealand, so why should I have to pay GST on them?

GST is not a tax on New Zealand-made goods. It’s a consumption tax – which means it’s generally charged on goods and services that are used in New Zealand. It makes no difference where the goods were manufactured.

 

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.

 

When do these changes apply?

From 1 December 2019 overseas businesses must collect GST on low-value goods supplied to consumers in New Zealand if they meet the GST registration requirements.

This is two months later than the date originally proposed in draft legislation (1 October 2019) to allow overseas businesses more time to make the necessary system changes.

 

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 you may not pay GST on all items you import.

 

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.

 

What will happen to parcels that cost over NZ$1,000?

Customs will continue to collect GST and tariff duty at the border on parcels or consignments valued over NZ$1,000. However, Customs will not collect GST on low-value goods in parcels or consignments valued over NZ$1,000 or on high-value goods (valued over NZ$1,000) if it has documentation to show that the GST has already been collected by an overseas supplier, marketplace or re-deliverer.

 

How will overseas businesses know when to charge me GST on my purchase?

Registered overseas businesses will determine whether your purchase must have GST applied. They will calculate whether the value of each item you buy (excluding any fees to send the package to you) is NZ$1,000 or less. They will charge GST on all low-value goods.

Some overseas businesses may opt to also collect GST on goods valued over NZ$1,000 so you may be charged GST at the point of sale instead of at the border.

 

Are there any exceptions?

Overseas businesses will not charge GST on supplies of fine metal, alcohol and tobacco products, because:

  • fine metal is already exempt from GST under existing rules
  • most alcohol and tobacco products (regardless of value) are subject to excise taxes and GST at the border. This is not changing.

Low-value goods sold to GST-registered New Zealand businesses for use in their business are also 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 overseas businesses may opt to collect GST on low-value goods supplied to GST-registered New Zealand businesses. They must issue a tax invoice which will allow the New Zealand business to claim the GST back.

 

Impacts for New Zealand consumers

How will the changes affect New Zealand consumers?

Consumers in New Zealand will pay GST on goods valued at or below NZ$1,000 when they place an order with an overseas supplier.

This means from 1 December 2019, consumers will generally:

  • pay a little more for most goods that cost less than NZ$400, because GST will now be charged.
  • pay less for most goods that cost between NZ$400 and NZ$1,000, because tariff duty and cost recovery charges will be removed for parcels or consignments below NZ$1,000.

This change will mean greater transparency for New Zealand consumers. In most cases, what you pay online will be the actual, full price. It will also reduce the chance that you're surprised by having to pay additional GST, tariff duty and cost recovery charges when your parcel arrives in New Zealand.

Note: Cost recovery charges collected by Customs include Customs’ import entry transaction fee and the Ministry for Primary Industries’ associated biosecurity system entry levy.

 

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 - if not already collected by the supplier

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

 

What goods attract tariff duty?

For information about what goods attract duty and an easy way to estimate how much duty, including GST, you may need to pay Customs, use the What’s my Duty estimator on the Customs website.

 

Could goods be held up at the border because of this change?

No. New Zealand consumers will pay any required GST on goods that cost NZ$1,000 or less when they buy them. This means there is no need to hold these parcels at the border until GST is collected. However, all existing border security and biosecurity checks and rules still apply.

The current process for collecting GST and tariff duty at the border on parcels or consignments valued over NZ$1,000 will continue to apply. Customs will not collect GST on parcels or consignments (or low-value goods within a parcel or consignment) valued over NZ$1,000 if they receive evidence that the overseas supplier, marketplace or re-deliverer has already collected GST.

 

Second-hand goods

Is GST payable on second-hand goods purchased for private use?

Yes. GST is a consumption tax – which means it’s generally charged on goods and services that are used in New Zealand. It makes no difference if the goods are new or second-hand.

If the supplier is GST-registered in New Zealand, then they must charge GST if the value of the item is NZ$1,000 or less.

GST will also be charged if the low-value second-hand good is sold over a GST-registered online marketplace or is brought to New Zealand by a GST-registered redeliverer.

 

Gifts

I have relatives overseas who buy me gifts which are sent directly to me. Will GST apply?

It depends on the circumstances.

When relatives overseas purchase gifts from overseas suppliers which are sent directly to you in New Zealand, overseas suppliers will charge New Zealand GST at the time of purchase if:

  • they are GST registered in New Zealand, and
  • the item is valued at NZ$1,000 or less, or
  • they have elected to charge GST on all goods they send to consumers in New Zealand.

If the item is valued over NZ$1,000 and has not had GST charged at the point of sale, then you (the recipient of the gift) will pay GST (plus any tariff duty and cost recovery charges) at the border.

 

What if my overseas relatives buy gifts which are posted to them and then they post the gifts to me in New Zealand. Will GST apply?

In this situation, the overseas supplier will not charge New Zealand GST at the point of sale because they do not know the final destination for the item is New Zealand. However, Customs will collect GST from you (the recipient in New Zealand) if the value of the gift is above NZ$1,000.

 

Will Customs continue to apply a gift concession?

Yes. When Customs charge GST and tariff duty, they apply a $110 concession to gifts. Learn more about the Customs gift concession on the Customs website.

 

Magazine subscriptions

Will GST apply to my overseas magazine subscription after 1 December 2019?

GST may not apply if you purchased the subscription before 1 December 2019 and you are making regular or periodic payments. Contact your subscription service for more information.

 

GST refunds

How will I get the GST back if I return a purchase?

If you return a purchase to an overseas business, that business is responsible for refunding the GST to you.

 

Buying and selling goods

I have an account as a seller with an online marketplace. I dropship items from an overseas supplier direct to my buyers. Who is responsible for GST?

As a New Zealand resident, you must register for GST under the existing GST rules if you carry out a taxable activity and:

  • your turnover was $60,000 or more in the last 12 months, or
  • will be $60,000 or more in the next 12 months, or
  • your prices include GST.

As soon as any of these things apply to you, you must register for GST within 21 days. See About GST for more information.

This means you will need to collect and return GST on your sales to New Zealand customers. You may add this GST to the price you charge your customers.

The online marketplace should not collect GST on your sales. They are only responsible for collecting GST for sellers who are non-resident.

Under the new rules, if your overseas supplier is registered for GST, then they:

  • must treat you as a consumer and charge you GST on low-value goods if your business is not GST-registered
  • are not required to charge you GST on low-value goods if your business is GST-registered.

 

Need help?

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

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