From 1 December 2019, the New Zealand Government has enacted new goods and services tax (GST) rules that require overseas businesses to register for, collect and return GST on low value goods sold to consumers in New Zealand.
The legislation will require offshore suppliers to collect GST when selling goods to New Zealand consumers, if:
- The value of the goods (including any freight and customs duties) is NZD$1,000 or less.
- Their total sales to New Zealand consumers exceed NZD$60,000 per annum.
This change is an extension of the laws already in place, where offshore businesses that are supplying remote or digital services to NZ consumers must account for GST on the services supplied. This is sometimes referred to as the ‘Netflix Tax’.
Who does this affect?
Any foreign business selling goods to New Zealand consumers, including marketplaces or
re-delivery services that sell or re-deliver low value goods to customers in New Zealand.
What does this mean for those businesses (your clients)?
These businesses are required to register for and pay GST if their taxable supplies of goods and services to New Zealand consumers are likely to exceed NZD$60,000 in the 12-month
period beginning from 1 December 2019.
GST can apply to the goods, international transport, insurance and the amount that is charged for the services. If this is the case, those clients are required to:
- Update their business systems to ensure they can collect and return GST.
- Register for GST in New Zealand (available from early September 2019).
- Collect GST on goods valued at NZD$1,000 or less, sold to consumers and delivered to an address in New Zealand.
- Pay GST to New Zealand Inland Revenue
- First return is due 7 May 2020 for the period 1 December 2019 – 31 March 2019
- Quarterly returns are due thereafter.
- Ensure that the receipt is provided to the consumer clearly showing the amount of GST charged.
- Complete relevant documentation for the New Zealand Customs Service.
What do you need to do?
If you are aware that your clients are selling low value goods to consumers in New Zealand, then you will need to inform them about the new rules and the impact to their business.
There are a number of issues to consider to ensure your clients are compliant with the new rules and the deadline is fast approaching.
If you think that your clients will be affected by these changes, please encourage them to get in contact with us. We can help with registering, advising of their obligations in New Zealand and preparation and filing of their returns. It is important that businesses assess their obligations and their business
processes to accommodate these changes as soon as possible.
Maggie has a breadth of experience, having dealt with a range of entities from large corporates, through to SME’s, trusts, ex-pats and high net wealth individuals. She is passionate about using her knowledge and experience to provide meaningful and relevant advice and takes pride in her ability to think “outside the box” in order to do so. Maggie is also an experienced presenter, having delivered numerous presentations and training sessions on trans-Tasman tax issues at international tax conferences.
Maxine enjoys delivering quality, personalised business advisory and taxation support to her clients and relishes the challenge of devising solutions for her clients’ tax issues. At Nexia NZ Maxine specialises in tax efficient structuring, advising on complex tax issues and assisting clients with tax planning and asset protection.