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GST: Q&As for overseas businesses

An image of a shipping label being stuck to a brown cardboard box. The text to the left reads "Selling goods to New Zealand consumers?"

GST: Q&As for overseas businesses

An image of a shipping label being stuck to a brown cardboard box. The text to the left reads "Selling goods to New Zealand consumers?"

General questions

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

New Zealand Customs is continuing to collect goods and services tax (GST) on imported goods, including anything bought online, 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?

Overseas businesses that sell low-value goods to consumers in New Zealand may need to register for, collect and return GST of 15% from 1 December 2019.

This applies to merchants or retailers selling directly to New Zealand consumers, as well as online marketplaces and redeliverers.

 

What is a low-value good?

A low-value good is a physical good valued at NZ$1,000 or less (excluding GST).

This NZ$1,000 threshold is based on the customs value of the good. This means shipping and insurance costs are excluded when determining if GST needs to be charged.

 

Does the NZ$1,000 threshold apply per item or per invoice/transaction?

Per item. If multiple low-value goods are sold in a single transaction, the supplier must collect GST on each low value good even when the total value of the sale/transaction is over NZ$1,000.

This also means that if a consumer in New Zealand purchases multiple goods in a single transaction made up of low-value goods and high value goods (goods valued above NZ$1,000), the supplier must collect GST on each low-value good. High value goods will generally continue to be taxed at the border as they come into New Zealand.

Processes will be put in place so Customs does not collect GST on any goods already taxed at the point of sale by the supplier.

 

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 tariff duty 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. It will also stop the loss of a significant amount of tax revenue with the steady growth in online shopping.

 

Do these changes apply to online shopping only?

No. These changes apply to all sales of low-value goods to consumers in New Zealand including online, mail order or by phone.

 

When do these changes take effect?

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

This is 2 months later than the date originally proposed in draft legislation (1 October 2019) to allow affected businesses more time to make the necessary system changes.

 

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.

 

Are there any exceptions?

These changes do not apply to supplies of fine metal, alcoholic beverages and tobacco products because:

  • fine metal (gold with a fineness of at least 99.5%, silver with a fineness of at least 99.9% and platinum with a fineness of at least 99.0%) is 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. But, if a New Zealand business imports goods in a consignment valued over NZ$1,000 the business will pay GST and duty on these goods at the border.

 

Which alcohol and tobacco products are excluded from the rules?

Suppliers are not required to charge GST on alcoholic beverages and tobacco products that are exempt from regulations made under section 406(1) of the Customs and Excise Act 2018. These products are specified in the Excise and Excise-equivalent Duties Table as follows:

  • alcoholic beverages - specified in headings 22.03, 22.04, 22.05, 22.06, 22.08, 99.10, 99.20, 99.25, 99.30, 99.45, and 99.50
  • tobacco products - specified in headings 24.02, 24.03, 99.60 and 99.65.

 

Did the New Zealand Government consult on these changes?

Yes. You can read the original discussion document the Government consulted on and the submissions received.

Parliament also sought input on the Bill at the Select Committee stage. On 31 May 2019, the Finance and Expenditure Select Committee reported back to Parliament on the Bill. You can read their report and the officials’ report on submissions received.

 

Are there any transitional provisions for these new rules?

Yes, there is a transitional rule for fixed-term contracts.

Under this rule, you can treat payments for low-value goods provided under a fixed-term contract as not subject to GST if:

  • the contract was entered into before 1 December 2019, and
  • the contract provides for regular or periodic payments for goods supplied progressively or periodically; and
  • the amount payable under the contract is set (or reviewed) for periods of 396 days or less.

This transitional rule only applies for the term of the agreement or up to 396 days from the start of the contract, whichever is earlier.

Example: A subscription for a monthly magazine starts on 1 August 2019 for a monthly payment of US$4.95 and will continue until 1 July 2020. The supplier elects to apply the transitional provision and does not charge GST for the full term of the subscription.

 

How will taxation at the point of sale and again at the border be prevented?

Including the right information on import documents will prevent the purchaser paying tax a second time at the border. Suppliers (merchants, online marketplaces and redeliverers) along with transporters and customs brokers all have obligations to meet to ensure relevant tax information is included on import documents.

Suppliers must also provide a receipt to the customer clearly showing the amount of GST charged. The recipient will be able to provide the receipt to Customs to ensure GST is not charged again.

 

What GST information do I provide to transporters/customs brokers?

Suppliers must provide their transporter or customs broker with the following information to include in import documents:

  • whether GST has been paid at the point of sale for each item, and
  • the GST number of the business responsible for returning GST.

Ask your transporter or customs broker to pass this information along the logistics chain so that it can be reported to Customs.

 

What charges will New Zealand consumers have to pay at the New Zealand border?

See questions and answers for New Zealand consumers - charges at the border.

 

Can we supply goods on Delivered Duty Paid (DDP) terms and collect GST, tariff duty, import entry transaction fee (IETF) and the biosecurity system entry levy (BSEL) from our customer?

Yes, you can. If you have an arrangement with the transporter and with the customer that you are supplying the goods on DDP terms, you can charge the customer an amount to cover the GST, any tariff duty, IETF and BSEL (if these apply), and pay the amount due to the company completing the import entry documentation.

The benefits for your customer are:

  • they don’t have to later pay these amounts to the transporter or to Customs
  • if calculated correctly it can speed up the release of the goods at the border.

 

Overseas businesses

What does this mean for overseas businesses that sell goods to New Zealanders?

Overseas businesses that sell goods to New Zealand consumers (online, by mail order or phone) need to:

  • update their business systems so they can collect and return GST
  • register for GST in New Zealand
  • collect GST on each good valued at NZ$1,000 or less, sold to consumers and delivered to addresses in New Zealand
  • provide the consumer with a receipt that clearly shows the amount of GST charged
  • complete relevant documentation for the New Zealand Customs Service, and
  • return that GST to the New Zealand Inland Revenue.

 

When do overseas businesses need to register for New Zealand GST?

Overseas businesses, online marketplaces and redeliverers need to register for GST when their total supplies of goods and services to New Zealand consumers:

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

Total supplies are all sales to New Zealand consumers that GST applies to including:

  • low-value goods valued at $1,000 or less each
  • remote services (online services and digital products) such as e-books, software downloads and streamed movies and music, and
  • amounts paid by the consumer for services such as delivery, insurance and your fees.

Do not include supplies to New Zealand GST-registered businesses when determining if you meet the NZ$60,000 registration threshold.

 

Do overseas businesses need to register for GST if they only sell goods to New Zealand businesses?

No. If overseas businesses only sell goods and/or services to New Zealand GST-registered businesses, they do not need to register for New Zealand GST.

 

Can overseas branches/divisions register separately?

An overseas business that sells goods and services to consumers in New Zealand through branches or divisions in separate locations must register for GST if the combined sales exceed NZ$60,000.

However, if a branch or division has its own accounting system it may apply to register separately so it can file its own GST returns.

A branch or division is a separate reporting line within a single entity.

 

How will overseas businesses determine if a good is above or below the NZ$1,000 threshold?

Overseas businesses will determine whether they need to collect GST by calculating the ‘customs value’ of each item being sold. In simple terms, the customs value of an item is the amount the purchaser will pay in New Zealand dollars. It does not include any additional costs to get the goods to New Zealand (for example shipping or insurance).

If this calculation is NZ$1,000 or less, a GST registered overseas business must collect GST. The business must add charges for transport, insurance and other services related to sending the goods to New Zealand before calculating GST.

Overseas businesses selling goods in a foreign currency will determine the goods’ value in New Zealand dollars at the time of sale to determine if they need to charge GST. Goods do not need to have New Zealand dollar pricing.

To determine whether a consignment is above or below the NZ$1,000 threshold, New Zealand Customs will calculate the customs value of the parcel.

 

If overseas businesses find it easier to charge GST on all their supplies of goods to consumers in New Zealand, including goods valued over NZ$1,000, can they choose to do so?

In certain circumstances overseas businesses, marketplaces and redeliverers will be able to charge GST on goods supplied to New Zealand consumers that cost more than NZ$1,000 each.

If 75% or more of the total value of the goods supplied to customers in New Zealand consists of goods individually valued at NZ$1,000 or less, overseas businesses can elect to charge GST on goods individually valued above NZ$1,000.

Overseas businesses that do not meet this test may also apply to charge GST on high-value goods by writing to the Commissioner of Inland Revenue. A range of factors will be considered before making a decision.

Overseas businesses that want to charge GST on supplies of high-value goods need to let Inland Revenue know. Marketplaces that decide to charge GST on their supplies of high-value goods also need to let their suppliers know.

 

If overseas businesses find it easier to charge GST on goods sold to GST-registered businesses, can they choose to do so?

An overseas GST-registered business can choose to charge GST on a sale to a New Zealand GST-registered business, if:

  • the value of the supply is NZ$1,000 or less, and
  • in the 12 months after the sale the business expects that more than 50% of all its sales to New Zealand customers will be made to non-GST registered customers.

 

Do sales have to be priced in New Zealand dollars?

No. At the time of supply, overseas businesses can choose to express amounts in a currency other than New Zealand dollars.

However, prices need to be converted to New Zealand dollars at the time of supply to determine whether the goods are individually valued at or below $1,000 and therefore whether GST is required to be charged.

The amount of GST payable to Inland Revenue must also be converted to New Zealand dollars before returning and paying it to Inland Revenue.

See the factsheet Converting currency to New Zealand dollars for information to assist you.

 

Online marketplaces and redeliverers

What is an online marketplace?

An online marketplace is an electronic platform, like a website or internet portal, that overseas businesses use to market and sell their goods and services.

 

When will an online marketplace need to register for New Zealand GST?

In situations where an overseas business sells their goods through an online marketplace, the marketplace will need to register and return the GST on the goods instead of the overseas business.

The rules for online marketplaces will apply to any marketplace that has offshore suppliers selling goods to New Zealand consumers, regardless of whether the marketplace itself is based in New Zealand or overseas.

A marketplace will need to register and return GST if the total value of remote services and low-value goods supplied to New Zealand consumers through the marketplace exceeds NZ$60,000 in a 12-month period.

 

What is a redeliverer?

Redeliverers are often used by New Zealand consumers when an overseas website does not offer shipping to New Zealand. The item is instead shipped to an overseas ‘hub’ or mailbox, then shipped to New Zealand by the redeliverer. The rules for redeliverers also cover some types of personal shopping services.

 

When will a redeliverer need to register for New Zealand GST?

An online marketplace or supplier is unlikely to know that goods are being sent to New Zealand when the consumer uses a redeliverer to bring goods to New Zealand. But, redeliverers will know the final destination of all goods they are ‘re-delivering’.

Therefore, a redeliverer is required to register for, collect and return GST if the total value of the low-value goods that they deliver plus any services they supply to New Zealand consumers exceeds NZ$60,000 in a 12-month period.

 

Administration questions

What is New Zealand's GST rate?

The GST rate in New Zealand is 15%.

 

How can overseas businesses register for GST?

Use our Non-individual registration online service. Provide your:

  • customer registration information including your taxpayer identification number from your country of residence
  • GST application details.

We will issue you a GST number which will also be the IRD number for your business.

Alternatively, you can download the Registration of non-resident for GST on low-value imported goods and/or remote services (IR994) form, complete this, and email it to us at info.lvg@ird.govt.nz

Registrations will be processed within 5 working days.

Note: Customers from the USA have reported difficulty with the ZIP code field. This field has been formatted to accept 9 digits for all states. If your ZIP code is 5 digits long, add zeros to the end to make it 9 digits.

 

Do I need to apply separately for an IRD number?

No. You do not need to apply separately for an IRD number. Complete the Non-individual registration online service or the IR994 form. We will issue you a GST number which will also be the IRD number for your business.

 

I’m already registered for GST in Australia. Do I have to register again in New Zealand?

Yes if you meet the GST registration criteria in New Zealand. Australian GST registration on low-value imported goods does not apply in New Zealand. Australia and New Zealand are separate tax jurisdictions.

 

Can I register for GST on low-value imported goods voluntarily?

Yes, you can voluntarily register for GST if your total supplies to New Zealand consumers is under NZ$60,000.

 

After I register, what happens if sales drop below the NZ$60,000 registration threshold? Do I stop charging GST?

While your business is registered for GST, you must continue to collect and pay GST. However, you can cancel your GST registration if you expect your total supplies to stay below the NZ$60,000 threshold. The cancellation can be requested through your online workspace (myIR).

 

How often will overseas businesses file a GST return?

Overseas businesses, online marketplaces and redeliverers who register from 1 December 2019 up to 31 March 2020, will file their first return for a period from their registration start date to 31 March 2020.

Then, from 1 April 2020, all overseas businesses must file GST returns quarterly as follows:

  • 1 April to 30 June, due 28 July
  • 1 July to 30 September, due 28 October
  • 1 October to 31 December, due 28 January
  • 1 January to 31 March, due 7 May

This is consistent with the rules for overseas suppliers of remote services.

 

Will filing be done electronically?

Yes. Once registered for GST, register for myIR to manage your GST online. You can file returns, send and receive messages, check your account balances, due dates and update contact information in myIR. Go to ird.govt.nz/myir to find out more.

 

How do I register for myIR?

The myIR registration must be completed by the person who will be responsible for filing the GST returns. You will need the IRD/GST number for the business.

  1. Complete the registration at ird.govt.nz/myir.
  2. Phone us to activate your account on:
    • +64 4 890 3056 Monday to Friday 8am to 4.30pm NZST
    • +64 4 978 0779 Monday to Friday 4.30pm to 8pm, Saturday 9am to 1pm NZST
  3. Set up your password. After we activate your account, you will receive an email with the information required to set up your password. This must be completed within 30 minutes.

 

How can overseas businesses make payment?

There are a number of options Find out more.

 

What information must be included on a customer’s receipt

Suppliers must provide a GST receipt if they have charged the customer GST on any of the goods in the transaction. Unless alternative information is agreed with the Commissioner of Inland Revenue, the GST receipt must include:

  • the supplier’s name and GST registration number
  • the date of supply
  • the date the receipt is issued (if different to the date of supply)
  • a description of the goods
  • the price paid for the goods, and the amount of GST included (which may be expressed in a foreign currency)
  • an indication of which goods have had GST charged. If GST is charged on everything listed on the receipt, the supplier can provide this indication by either showing the amount of GST on each line item or stating the total price and a statement that it includes GST.

GST receipt examples

In the following receipt examples we have use GST to refer to the type of tax that has been paid. Tax can also be used instead.

GST receipt 1 - GST charged on all items. Prices are GST-inclusive. Statement advising total price includes the GST and the amount of GST charged

GST receipt 2 - GST charged on all items. Prices are GST-exclusive. Total GST field showing total GST charged on all items

GST receipt 3 - GST charged on all items. GST field showing GST charged on each item

GST receipt 4 - GST charged on all items. Prices are GST-inclusive. Statement advising total price includes GST on all items and shipping

GST receipt 5 - GST charged on low-value items only. GST field showing GST charged on low-value items only

Note

Officials are seeking to include an amendment in a taxation bill so that the supplier is not required to state the amount of tax included on the receipt. This requirement is not necessary since an indication of which goods have had GST charged is provided. The suggested amendment would apply retrospectively from 1 December 2019.

 

How to request agreement on alternative GST receipt information

The Commissioner of Inland Revenue has discretion to agree with suppliers on alternative information that may be included on a GST receipt. The Commissioner would agree that alternative information is acceptable if the information is enough to easily identify that GST has been charged and on which goods.

To request an agreement on alternative information to be included on a receipt, email us at info.lvg@ird.govt.nz

 

When a full tax invoice is required

A supplier must issue a full tax invoice for supplies of low-value goods to New Zealand GST-registered businesses where they mainly supply consumers and have elected to charge GST on business-to-business supplies of low-value goods.

Provided a refund has not been made, a full tax invoice may also be issued when GST is incorrectly charged to a New Zealand GST-registered business, provided that the value of the supply is NZ$1,000 or less (excluding GST). The recipient can use the tax invoice to claim a GST deduction in their GST return.

 

What information must be included on a full tax invoice

The requirements for a tax invoice include:

  • the words “tax invoice” in a prominent place
  • the supplier’s name and GST registration number
  • name and address of the recipient
  • the date of issue
  • a description of the goods and services supplied
  • quantity or volume of the goods and services supplied
  • the price paid for the goods excluding GST, the total GST charged and the price paid including GST (which may be expressed in a foreign currency), or where GST is included in the price, the price paid and a statement that it includes GST.

Invoice examples

Tax invoice 1 - Price per item showing as GST-exclusive. Total GST field showing total GST charged on all items

Tax invoice 2 - Price per item showing as GST-inclusive. Statement advising total price includes GST

 

Issuing a GST receipt and a full tax invoice on the same document

Suppliers that have elected to charge GST on low-value supplies to GST-registered New Zealand businesses can issue a single document that qualifies as both a GST receipt and full tax invoice, provided the document fulfills the requirement of both.

However, tax invoices should not be issued for supplies valued over NZ$1,000 (excluding GST) when the customer is a GST-registered business. In these cases, the supplier should refund the GST charged.

 

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

If you cancel an order after accepting payment, or the purchaser returns the goods to you, you are responsible for refunding the GST to your customer.

If you have issued a tax invoice for the supply, you must issue your customer a credit note which clearly sets out:

  • the words "credit note" in a prominent place
  • your name and GST registration number
  • the name and address of your customer
  • the date the credit note was issued
  • the original amount of consideration paid by the customer and the corrected (adjusted) amount of consideration (eg nil for a cancelled supply)
  • the total amount being refunded to your customer, and the GST component of that amount.

You can make an adjustment in your GST return to reduce your GST liability by the amount of GST refunded to your customer. To do this:

  • simply net the amount of returns off against your sales, if you are registered under the simplified pay-only system, or
  • include the amount of refunded GST in the credit adjustments box if you are registered under the pay and claim system.

 

How will IRD enforce the law if an overseas supplier does not comply?

If a business does not want to work with us, New Zealand has agreements with other countries on:

  • mutual cooperation
  • information exchange
  • assistance in tax matters.

These agreements cover an extensive network of jurisdictions, including our major trading partners.

The agreements mean New Zealand can request other foreign tax authorities to provide information about foreign taxpayers, as well as share information with foreign tax authorities about foreign taxpayers that are under audit in New Zealand. Inland Revenue and Customs will also share information and work together to help identify instances of non-compliance.

When we detect someone has not registered for GST when they should be, we can:

  • issue a default assessment of the GST liability
  • register the debt with New Zealand courts
  • register and pursue the debt in the courts of the country that the supplier is based using our international agreements.

New Zealand also has agreements with some foreign tax authorities allowing them to collect unpaid GST on New Zealand's behalf.

 

How New Zealand’s rules compare to Australia’s rules from 1 December 2019

 

New Zealand Australia
GST rate

The New Zealand GST rate is 15%

The Australian GST rate is 10%

What is a low-value good?

Goods with a customs value at or below NZ$1,000 each.
Exceptions: alcohol, tobacco products and fine metals.

Goods with a customs value at or below AU$1,000.
Exceptions: alcohol, tobacco products and fine metals.

Items valued above the low-value goods threshold

Overseas businesses, online marketplaces and redeliverers have the option to charge GST on items over the low-value goods threshold, if:

  • 75% or more of the total value of the goods supplied to customers in New Zealand consists of goods individually valued at NZ$1,000 or less, or
  • the Commissioner of Inland Revenue has given them approval to do this.

GST should not be charged on items valued over AU$1,000.

 

Multiple low-value goods

If multiple low-value goods total over NZ$1,000, the supplier must collect GST on each low-value good.

If multiple low-value goods total over AU$1,000, the supplier can decide not to charge GST if it reasonably believes the goods will be imported in one consignment.

Sales to GST-registered businesses

These sales are excluded but in some circumstances if the supplier chooses to, they can include them. If GST is incorrectly charged to a GST-registered business in New Zealand, the overseas business that sold the goods can provide a refund. Or if the value of the supply totals NZ$1,000 or less (excluding GST) they can issue a tax invoice which the recipient can use to claim a GST deduction.

These sales are excluded. If GST is incorrectly charged to a GST-registered business, the supplier can provide a refund. The recipient may only be able to claim a deduction in limited cases.

Registration requirements

Overseas businesses, online marketplaces and redeliverers must register for GST if their total supplies of goods and service to New Zealand consumers:

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

Overseas businesses, online marketplaces and redeliverers must register for GST if their total supplies of goods and services exceed AU$75,000 in a 12-month period.

Filing periods

Overseas businesses, online marketplaces and redeliverers who register from 1 December 2019 up to 31 March 2020, will file their first return for a period from their registration start date to 31 March 2020.

Then, from 1 April 2020, they need to file quarterly. Quarterly filing is not available to New Zealand-resident entities required to return GST under these rules.

Requires quarterly GST filing.

Information requirements

Suppliers need to:

  • provide receipts to consumers showing that GST has been charged
  • take reasonable steps to ensure GST information is included on Customs documents

Suppliers need to:

  • provide receipts to consumers showing that GST has been charged
  • take reasonable steps to ensure GST information is included on Customs documents
Preventing double tax
  1. The supplier provides tax information on customs documents (fast freight only)
  2. The consumer can provide their receipt to ensure GST is not charged again
  3. The consumer needs to ask for a refund from the supplier if GST is paid again at the border
  1. The supplier provides tax information on customs documents (fast freight only)
  2. The consumer can provide their receipt to ensure GST is not charged again
  3. The consumer needs to ask for a refund from the supplier if GST is paid again at the border
Online marketplaces

Online marketplace operators collect GST on supplies of low-value goods made by non-resident underlying suppliers through their marketplace.

Online marketplace operators collect GST on supplies of low-value goods made by underlying suppliers through their marketplace, if the goods are supplied from outside Australia.

Redeliverers

Redeliverers collect GST if they assist consumers in getting goods, and if the supplier or marketplace operator does not assist in bringing the goods to New Zealand.

Redeliverers collect GST if they assist consumers in getting goods, and if they supplier or marketplace operator does not assist in bringing the goods to Australia.

 

More information


Is any more information available?

Presentation

Factsheets

Special report

Legislation

 

I have more questions

If you have more questions after reading the information provided here, email them through to us at info.lvg@ird.govt.nz.