This is an update regarding various legislative reforms to the New Zealand Goods and Services Tax (GST) treatment of low value goods (NZD $1,000 and under) sold to New Zealand based consumers. This may impact you or your customers.
In summary, from 1 December 2019, low value goods (excluding alcoholic beverages and tobacco) supplied by overseas suppliers (including marketplaces and re-deliverers) to a New Zealand based consumer (who is not registered for GST) will become subject to New Zealand GST. Import of goods into New Zealand will continue to be subject to GST for sales over NZD $1,000 (i.e. GST is paid at time of import), however, there are provisions to ensure that double taxation does not occur. Therefore, with effect from 1 December 2019, New Zealand Customs will no longer collect any duty (including import GST) on consignments valued at NZD$1,000 or less, except for tobacco and alcohol. The onus to charge GST (and deposit with the IRD) on the low value goods, if any, would be on you or your customers, at the point of sale.
Additional information regarding the New Zealand GST law changes can be found on this link.
We have included some general information regarding the New Zealand GST law below for your reference.
The requirement to register for New Zealand GST arises when sales are made to New Zealand consumers in excess of the New Zealand GST registration threshold of NZD $ 60,000 per annum. In considering whether an entity needs to register for GST purposes, regard should be had to the following:
- offshore supplies of low value goods to New Zealand consumers made directly by you and / or your customers; and/or
- supplies of goods that are already stored in New Zealand
Further, the following intermediaries (whether New Zealand residents or not) may be considered as deemed suppliers and may also be liable to register:
- Electronic market places (e.g., websites which connect offshore suppliers with New Zealand consumers)
- Approved market places (i.e., non-electronic market places)
- Re-deliverers (e.g., a person who arranges for delivery of goods to end consumers in New Zealand, including purchasing of goods as an agent for the recipient or arranging or assisting the purchase of the goods from outside New Zealand)
Voluntary registration is also possible if sales are below the threshold.
You or your customers will need to consider your individual circumstances and you should consult your tax advisors to determine whether or not you need to be registered based on your sales of low value goods to New Zealand based recipients and business activities you conduct in New Zealand (if any). The Inland Revenue’s website also contains information regarding the requirements on this link.
There are 2 types of New Zealand GST registration for non-resident suppliers under the new GST rules for low value goods. You or your customers should be consulting your tax advisor for more detailed information, including the appropriate registration for you and the additional documentation requirements that apply to non-residents. More information regarding GST registration under the GST rules for low value goods can be found on this link.
In the event that you or your customers are required to be registered for New Zealand GST, in light of the new GST law changes in New Zealand, it would be prudent to obtain registration prior to the new laws coming into effect i.e. 1 December 2019.
Non-compliance with the obligation to register in New Zealand
The Inland Revenue has undertaken a targeted communications strategy, advising taxpayers that may be caught by the measures of their registration obligations and the impact of any noncompliance. The Inland Revenue will use all available enforcement strategies to ensure compliance once the measures commence.
As part of the Inland Revenue’s activities in ensuring compliance, the Inland Revenue could impose penalties and interest in addition to the tax payable on sellers who do not comply with the New Zealand GST law. Information can be obtained on this link.
GST obligations post registration
Broadly, once you have registered for New Zealand GST, you will be required to account for New Zealand GST in relation to all taxable sales, and submit a quarterly GST return and corresponding New Zealand GST payment to the Inland Revenue. To the extent that a GST-registered entity incurs any GST on payments or imports, this GST may be recoverable via periodic GST returns. You can lodge your GST return electronically or by mail. You can pay through internet banking, credit card, debit card or direct debit.
Further information can be found on this link You should be consulting your tax advisors on your obligations in order to remain compliant with the New Zealand GST law.
Where New Zealand GST must be collected and remitted to the Inland Revenue, New Zealand GST will generally apply to the value of the goods that you are supplying and this amount must be clearly stated on the invoice issued. However, whether or not GST actually needs to be included in the price needs to be determined by you and your tax adviser. This will depend on whether you are registered or required to be registered for New Zealand GST and whether the products being sold are subject to New Zealand GST. Further information can be found at on this link.
Changes to Customs documentation
All consignments valued at NZ$1,000 or less can be cleared on an Inward Cargo Report (ICR), a Simplified Import Declaration (SID) or an Import Declaration. ICRs and SIDs will be written off as GST paid (collected by supplier) or not required (supplier not registered for GST) unless the goods are alcoholic beverages or tobacco.
There will be changes to ICR, SID and Import Declaration (ID) with the additional required fields, which you will need to provide.
The relevant additional fields on the ICR, SID and ID are:
- The New Zealand GST registration number of the supplier for GST purposes
- in the GST PAID indicator for each goods item
- Mandatory 11-digit Tariff classification for each item in the consignment (only applicable in respect of ICR and goods valued over NZD$400 and up to NZD$1,000).
Customs documentation compliance is imperative when low value goods are brought into New Zealand. To ensure compliance with changes in the New Zealand GST law, offshore suppliers of low value goods to New Zealand based recipients are required to ensure that certain tax information is included in one or more of the customs documents. As part of updating our systems and processes to ensure compliance with the New Zealand GST law, we will be requesting you to provide us with the following information [details should be included in the receipt(s) issued to customer(s) and accompanied with the parcel. You can also provide the details to Aramex / Fastway in advance (i.e. before clearance of the goods from Customs)]
Information that businesses must provide
- GST registration number of the business treated as the supplier for GST purposes.
- When the business registers, the Inland Revenue issues them with a unique identifier (IRD / GST number) known as the IRD number where the IRD number is 9 digits
- IRD number of the purchaser, if the supplier for GST purposes has it.
- Whether GST has been charged on the sale of each of the goods.