Chapters 3 to 5 of this discussion document outline the proposed design features of the offshore supplier registration system. The Government is keen to ensure that the design of the rules is workable in practice so that compliance costs are kept to a minimum. The proposed rules, therefore, are broadly in line with New Zealand’s current rules for collecting GST on cross-border services and intangibles, and the recently enacted rules for low-value imported goods in Australia. Melissa later purchases a pair of running shoes from the same offshore website with a value of $300 (inclusive of shipping). This means the total duty owing on Melissa’s running shoes is $79.50 (the 10% tariff of $30 plus GST of $49.50 ($330 x 15%)). Melissa is required to pay GST and tariff duty on the running shoes.

1. Collecting GST at checkout on all goods will be the most reasonable method for most ecommerce merchants.
2. Since the duty on the clothing is only $26.50 (comprising tariff duty of $10 ($100 x 10%) and $16.50 of GST ($110 x 15%), Melissa’s purchase is below the current de minimis threshold.
3. An estimate was calculated based on an assessment of the value of goods under the current de minimis.
4. If you’ve registered for GST, there are a couple of options for how you can determine the amount of GST to collect at checkout.
5. [8] The de minimis does not apply to shipments of alcohol or tobacco products, as excise taxes are required to be collected on these goods.
6. GST was introduced in conjunction with compensating changes to personal income tax rates and removal of many excise taxes on imported goods.

A shortfall in GST revenue may eventually have to be paid for by tax increases or spending cuts. 2.6 Depending on freight costs, the $60 de minimis roughly equates to a parcel worth $400 if GST is the only duty applying. It can equate to a parcel with a much lower value when tariff https://www.online-accounting.net/ duty applies or if the freight and insurance costs are high.[8] Tariff duties of five percent or ten percent apply to a range of goods, including some apparel and footwear. Cost recovery charges of $49.24[9] also apply to goods above the de minimis threshold stopped at the border.

It’s added to the price you paid for the goods plus shipping costs, and you may have to pay it before customs will release the shipment. If you are required to collect and remit GST, you will also be required to supply New Zealand customers with an appropriate receipt that notifies https://www.quick-bookkeeping.net/ them of the GST applied to their order. If your business is below the 60,000 NZD threshold, then you do not need to do anything. Duty, GST, and fees will be collected at the border on shipments over 1,000 NZD or for any shipments with alcohol and tobacco of any value.

Although the OECD work suggested various options (including educating sellers and information sharing), New Zealand’s draft rules are wide and will be based on a full GST liability model. New Zealand’s closest neighbor, Australia, is opting for an information sharing model, yet to be implemented. Other countries, like Canada, tax platforms in a targeted way (short-term accommodation) and allow certain facilitation fees to be zero-rated. India applies GST to ride shares and food delivery services purchased through apps. Be sure to keep track of the GST collected throughout the quarter to save you time in calculating the amount to remit.

Payment or refund

This is because our GST system is very broad-based – it applies to a wide range of goods and services and there are very few exemptions. When GST applies broadly it ensures that consumer decisions to purchase particular goods or services are not influenced or driven by tax considerations. Visa-waiver countries for New Zealand are listed in What You Need to Know About the New Zealand ETA & Visitor Levy. A limited number of duty-free stores outside of the airports do this, which we outline in our complete guide to Duty-Free Shopping in New Zealand.

2.2 Conversely, goods and services that are exported (and therefore consumed offshore) are generally untaxed. Under the GST rules, exports are zero-rated, meaning GST is charged at a rate of zero percent and businesses can claim the GST back on the cost of their inputs. Allowing exporters to claim back GST on their inputs ensures that GST is not a cost on businesses or offshore consumers. When GST is collected on low-value goods to a New Zealand business, you can choose to refund the New Zealand business for the GST amount collected or you can send them a full tax invoice. The New Zealand business can use the tax invoice to claim a GST deduction on their GST return for orders valued less than 1,000 NZD.

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© 2024 KPMG, a New Zealand Partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. B) If your tax invoice does not show the GST amount, you need to ensure GST is calculated at 15% of the gross amount. If GST is not calculated at 15%, https://www.kelleysbookkeeping.com/ you must show the GST exclusive amount, the GST amount, as well as the gross amount. Because GST is a tax on all goods and services, it will be applied to almost everything you purchase in New Zealand. That includes food, medication, equipment, going to the hairdressers, the doctors and even the activities you are likely to do as a traveller in New Zealand.

You don’t have to charge GST on exports, which includes products you sell on the internet to overseas customers. Financial services, residential rent, and donated goods sold by non-profits fall into this category. While you don’t collect any GST when the rate is 0%, you do need to report the sales on your return. “Sharing of GST onnew builds acknowledges the key role local government playsto deliver the infrastructure needed as our regions grow andwill be an important piece of the fundingpuzzle.

Taxable Supply Information (“TSI”)

There are a number of different payment options available, and you will receive more details on how to pay GST after you register for your GST number, but the process is fairly straightforward. Whatever method you use to collect GST, make sure you store the data appropriately so you remit the proper amount of GST to New Zealand. If you choose to refund the GST to the purchaser, be sure to withhold this amount from the GST you remit at the end of the quarter.

Download the GST Guide for Business

This may seem a little confusing, so keep reading and we’ll explain this in more detail. Prior to December 1st, 2019, New Zealand customs collected duty and tax at the border when the amount of duty and tax due on the shipment is greater than 60 NZD. When New Zealand collects duty and taxes at the border, they also assess an import transaction fee and MPI levy, which equals a combined amount of 55.71 NZD in addition to the duties and taxes. This gets expensive for an online shopper and is part of an archaic system designed before cross-border ecommerce was relevant. 2.26 The success of an offshore supplier registration system to collect GST on cross-border services and intangibles illustrates that such a system is effective and relatively easy to comply with.

This measure would take effect in New Zealand from the 2024 calendar year, with the first information reporting obligations (and exchange) occurring in early 2025. Market forces will dictate how underlying sellers will make supplies in the future and the impact of prices on account of the new rules. At the time of the original consultation in March 2022, many of those submitting comment felt that New Zealand should adopt a wait-and-see approach to allow more time for the full impact of the sharing economy to be better understood. The existing rules bring in annual GST in excess of NZ$300 million ($184 million). Officials estimate that the New Zealand gig economy is close to NZ$2 billion (regulatory impact statement, finalized May 25, 2022) so the new measure is likely to add significant new GST revenue. GST is a tax added to the price of most goods and services, including imports.

Any orders with goods valued over 1,000 NZD to a GST-registered business will need to be issued a refund. TSI is essentially a list of information you need to provide to your GST registered customers. Most of the required GST information should already be included in your tax invoice. TSI is required to be issued within 28 days of a request being received for a TSI. If your business exceeds the 60,000 NZD threshold, then you will be required to register for, collect, and remit GST directly to New Zealand on all low-value goods. Duty and GST on high-value goods will be collected at the border or, for simplicity and if you meet certain requirements, you may elect to collect and remit GST on all goods (low and high value).

The first option is much more complicated and not recommended for most ecommerce merchants. When a shipment is a mix of low-value and high-value goods, it would require that you only collect and remit GST on the low-value goods. Since GST is applied to the shipping costs, you would need to use a reasonable apportionment method to collect and remit GST on the portion of shipping costs applied to low-value goods. 2.11 Despite these benefits, when GST does not apply evenly, it may bias consumer and business decisions, which could lead to unfair and inefficient outcomes. It is generally levied at a single standard rate of 15%,[5] and there are very few exemptions.[6] Consumption taxes seek to tax consumer spending on goods and services. New Zealand’s GST system, along with other value-added tax (VAT) and GST systems around the world, is based on the destination principle.

2.4 GST on imported goods is currently collected by Customs at the border. However, GST is not collected if the total duty value (including GST, tariffs and other duties) is less than $60. 2.3 New Zealand’s GST system is regarded throughout the world as a model consumption tax.

2.10 In general, the increasing ability to easily purchase goods and services online has benefited New Zealand. It has given consumers greater access to a wider range of goods and services from around the world, and increased competition in the domestic retail market. Increased competition tends to encourage the efficient use of resources, which can result in lower prices, greater innovation, and better quality goods and services for consumers. You may not realise it, but an arrival and departure tax is added to the cost of your flight or cruise ticket to and from New Zealand. The arrival and departure tax for New Zealand, also known as “border processing levies”, is a fee to pay for the Customs and Biosecurity procedures you go through upon arrival and departure. There is no upfront cost to pay for these fees, they are included in the cost of your travel ticket.

Please contact our KPMG GST specialist team if you need further guidance. The IVL applies to all visitors with a passport from either a visa-waiver country or a country where you have to apply for a visitor visa to visit New Zealand. The IVL costs NZ$35 and you will pay this either when you request your NZETA or when you apply for your Visitor Visa. Almost all of the time, businesses will include GST in the price displayed. However, some businesses will write a price and mention “+ GST” which means that you should add the GST to that price to know how much the price is in total. This is pretty rare but still happens in some trade, wholesale retailers and services, so keep an eye out.