Changes To Gst For Overseas Purchases

Brad Phillips
Principal
03 211 3782
021 317 151
bradp(at)mdp.co.nz

Craig McCallum
Associate
03 928 5158
027 698 9511
craigm(at)mdp.co.nz

Kathryn Ball
Consultant
03 211 3774
027 454 8414
mailto:kathrynb(at)mdp.co.nz

On 18 October 2018 the Minister of Revenue, Stuart Nash, announced the Government will introduce a tax bill with the changes expecting to come into effect from 1 October 2019. From 1 October 2019 it is proposed:

  • Offshore suppliers of goods, who sell more than $60,000 of goods in New Zealand, be required to register, collect and return GST on goods valued at or below $1,000 supplied to consumers in New Zealand, unless the purchaser is a GST registered business in New Zealand.
  • Tarrifs and border cost recovery charges would be removed for imported goods valued at or below $1,000.
  • The current process would continue for imported goods valued over $1,000.

The table below summarises the changes for the different parties.

Note that the table only reflects how the proposed rules would work in the majority of cases and actual results may differ in some instances.

Impact on consumers

These rules do not necessarily mean that all online purchases of goods will become more expensive.

Based on these proposals imported goods valued at or below $1,000 would have GST added to the purchase price by the overseas seller. Goods valued below $400, which do not have GST, duties and cost recovery charges collected at our border, would be more expensive under this proposal.

However, goods valued below $400 but above the current threshold of $60 of duty owing, and all goods valued between $400 and $1,000 would be cheaper under the proposal.This is because consumers would no longer pay tariff duty and cost recovery charges on these goods.

Example:

The proposed rules will be included in a Bill currently scheduled for introduction in November 2018. We will discuss this Bill further in our January 2019 edition of Topical Taxes.



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