The Australian Productivity Commission completed its inquiry on 31 October 2017 and concluded that the legislated model was the most feasible option at the present time. 2.18 While it is difficult to estimate the total revenue foregone resulting from the non-collection of GST on low-value imported goods with certainty, it is clear that the numbers are significant and a growing concern for Government. 2.12 The current policy settings place domestic suppliers of goods at a competitive disadvantage compared with offshore suppliers that are able to transport low-value goods directly to their customers without the imposition of GST. This is having the greatest impact on domestic sellers that provide goods that are similar to goods sold from offshore (or substitutable products). 2.3 New Zealand’s GST system is regarded throughout the world as a model consumption tax.
- Find out more about low value imported goods or what to do if you get charged GST twice.
- If you have paid out more GST than you’ve collected, you may receive a refund.
- You can only claim GST on goods and services to the extent they’re used in your taxable activity to make taxable supplies.
- 2.17 Since then, further work has been undertaken by officials using a mixed dataset that includes Customs’ sample data of goods coming across the border.
- The IVL costs NZ$35 and you will pay this either when you request your NZETA or when you apply for your Visitor Visa.
- On 1 October 2016, the taxation of digital (’remote’) services supplied by offshore companies (non-New Zealand) to consumers based in New Zealand changed.
This is similar to VAT, and based on the OECD’s standard indirect tax regime model. It is one of the most progressive regimes in the world, with a wide base and limited exemptions. Plus, for more information on work taxes, check out our guide to the New Zealand Work Tax System. You must request and pay for an NZeTA before you travel to New Zealand.
How do you work out the GST amount of a price?
The Bill includes several remedial changes to the legislation passed to introduce comprehensive changes to the existing GST invoicing rules (which come into effect from 1 April 2023). The rules as currently drafted have resulted in certain unintended consequences, creating confusion on the information requirements. On 1 October 2016, the taxation of digital (’remote’) what are assets and liabilities services supplied by offshore companies (non-New Zealand) to consumers based in New Zealand changed. She collected $2,850 in GST through her design services but also paid $330 in GST on business-related expenses. This means, for her May operations, Sarah will need to remit $2,520 to the New Zealand Inland Revenue Department (IRD) as part of her GST return.
This amount can be offset against the $54,750 GST collected total to determine the net GST payable. Calculating GST in New Zealand remains straightforward despite the rate change. The calculation is based on the 'base’ value – the price excluding GST for adding GST, or the total price including GST for determining the tax component. For simplicity, let’s consider a base value of $100 in our examples.
Even though registering means extra work for your business, it has some advantages. 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. There are a number of practical issues to note, especially in relation to the boundary issues inherent in the draft rules and the potential systems changes. The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated.
This is usually 15%, however, it may be “zero-rated” at 0% in certain circumstances. A new bill proposes significant changes to the goods and services tax treatment of the gig and sharing economy in New Zealand. Eugen Trombitas of PwC NZ looks at the details and some practical issues to note. That new piece of GST legislation mirrors similar rules governing the supply of digital services introduced in the European Union (EU) in January 2015 on the taxation of digital goods.
Digital Platforms and GST—Significant New Zealand Developments
On occasion, you may pay GST to your suppliers when you buy supplies for your business activities. However, unlike regular consumers, you can claim this back if you have registered with Inland Revenue (IRD). The proposals also include introduction of the „flat rate” regime for the benefit of underlying suppliers who are not registered for GST purposes (for e.g. on the basis they do not exceed the GST registration threshold). For completeness, suppliers of these services who are registered for GST will continue to take input tax deductions for the GST on their costs in making these supplies in the usual way.
There are two ways of paying for the NZeTA and IVL, either through an Immigration New Zealand app or their website. The cost is NZ$9 through the mobile app and NZ$12 through the website. Again, see the guide mentioned above for instructions on how to pay. Established in 1986, the Goods and Services Tax (GST) is a tax on almost anything you purchase in New Zealand. It is an inherent part of your trip here, whether you notice it or not. If you regularly sell goods or services you might need to charge GST to your customers.
Gaming sponsors brace for impact amid GST turmoil
2.17 Since then, further work has been undertaken by officials using a mixed dataset that includes Customs’ sample data of goods coming across the border. An estimate was calculated based on an assessment of the value of goods under the current de minimis. This work conservatively estimates that the foregone GST revenue for the 2016 calendar year was around $80 million. Assuming a foregone revenue growth rate of ten percent a year, the foregone revenue is projected to grow to $127 million by 2021. 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. 2.6 Depending on freight costs, the $60 de minimis roughly equates to a parcel worth $400 if GST is the only duty applying.
This example highlights the importance for small business owners, like independent graphic designers, to accurately track both their income and expenses for effective GST management. Understanding these calculations helps ensure compliance with New Zealand’s tax regulations and aids in maintaining a clear financial picture of the business. 2.27 To deal with the issues outlined in this chapter, the Government intends to implement an offshore supplier registration system for collecting GST on low-value imported goods.
You cannot claim GST for supplies you use privately or to make exempt supplies. 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. 2.19 Government revenues pay for important public services such as education, healthcare, roads and superannuation. Given that over thirty percent of total tax revenue is collected from GST, an increasing gap in that revenue base becomes a concern for everyone who relies on these services. A shortfall in GST revenue may eventually have to be paid for by tax increases or spending cuts. Apparel attracts a ten percent tariff duty where New Zealand does not have a free trade agreement with the country of the goods’ origin.
It can equate to a parcel with a much lower value when tariff 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. SCI is essentially a list of information you are required to provide to a GST registered customer to correct an error in the TSI.
Some rare services are exempt from GST and duty-free will offer items tax-free when landing in New Zealand from an international flight. We also go over whether it is necessary to tip in New Zealand, as well as advice for international travellers paying taxes for working in New Zealand. These are the taxes you might be expected to pay as a tourist or international visitor to New Zealand, which we will go into more detail about in this New Zealand tax guide for travellers.
2.7 Historically, the majority of imported goods have been imported by commercial entities in consignments above the de minimis. When GST was introduced in 1986, very few final consumers imported goods below the de minimis. Therefore, the compliance and administrative costs involved in taxing imported goods below the de minimis was considered to outweigh the benefits of taxation at that time.
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. You pay a 15% goods and services tax (GST) on most of your purchases in New Zealand. “Continuing to rely so heavily onhousehold and business rates is not a sustainable fundingapproach for local government.
Please note the comments above are for ordinary transactions subject to GST. Different rules may apply to imported goods or services, or acquisitions from non-GST registered person. There could be other practical implications https://intuit-payroll.org/ as a result of the new GST invoicing rules being implemented. Please contact our KPMG GST specialist team if you need further guidance. These are different from exempt supplies, which do not attract GST to begin with.