You’ll soon be paying GST on purchases you make online from overseas companies.
Many overseas companies have agreed to cooperate with the New Zealand Government and charge their customers GST, provided the system is kept simple. These companies will collect GST and remit to our IRD. Australia is also looking at creating a register of offshore sellers.
Offshore sellers will be able to recognise their New Zealand customers in various ways such as their IP addresses, credit card BINs and phone numbers.
Tax collection will start from 1 October 2016.
If the overseas supplier is selling only to New Zealand businesses, (which are registered for GST), there will be no need to register for GST. Overseas suppliers will not need to issue tax invoices. If a New Zealand business is charged GST by mistake and the amount is less than $1000, the supplier may issue a tax invoice so the New Zealand customer can claim the GST. If the amount is greater than $1000 or the New Zealand business can’t get the supplier to send a tax invoice, the New Zealand business will have to get the GST refunded by the supplier.
Businesses will, of course, be caught in the net but they’ll be able to claim back their input tax.
The big unsolved question is how to collect GST on parcels coming in from overseas. Currently, there’s no GST on articles costing less than $400. This is because it is uneconomic to collect the tax. If digital transactions such as downloaded music are to be taxed regardless of the cost, how will the Government find a way to tax small items coming in by post?