GST

Paying GST on overseas Internet purchases

Australia just started the process of making it compulsory.

The Australian Government has today introduced legislation to the House of Representatives that will require foreign retailers and online marketplaces to register for Australian GST, and Retail NZ says it’s time NZ’s National-led Government followed suit.

“The Australian Treasurer spoke in Parliament in Canberra today noting the new requirement is part of the Australian Government’s commitment to creating a fairer tax system, supporting small businesses and establishing a level playing field for Australian businesses,” Greg Harford, Retail NZ’s General Manager for Public Affairs said today. “The Treasurer correctly said the Australian Government is leading the way in delivering a GST system that is fit for our modern world and our modern economy, and that it is only a matter of time before other jurisdictions follow suit.

“Retailers in New Zealand have long been disadvantaged by a loophole that allows low value goods to be imported into the country without the seller of those goods paying its fair share of GST and duty. With the new Australian rules coming into place on 1 July, it’s now more critical than ever that our New Zealand Government follows suit as a matter of urgency. Read more »

Happy BIRTHdaaaay GSTee-eeeeeeeee

30 years!

…we celebrate 30 years of having a GST system that is world leading and simple to apply, says Revenue Minister Michael Woodhouse

“For 30 years now, the basic concepts of GST have remained unchanged since its introduction, and have rightly seen New Zealand’s GST system held up around the world as a model for other nations,” Mr Woodhouse says.

“When our goods and services tax was introduced, it was marked by three revolutionary concepts:

  • it was levied at a single rate
  • it has very few exemptions, making it a broad based tax, and
  • it was subject to extensive public consultation.

“A broad-based, low rate approach helps ensure that our GST is fair and generally free of the sorts of complexities seen in other such taxes around the world. This has made it easy to comply with and the revenue raised meant that income tax could be lowered.” Read more »

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It’s election year next year, of course they aren’t going to change it now

Nicky Wagner is no slouch and she knows that whacking GST on online purchases in an election year might well cost significant amounts of votes.

That’s why she’s parked the issue until at least 2018.

The Government wants to lower the threshold on online purchases which qualify for GST from mid-2018, but says more work is needed and there will be no change without public consultation.

Currently, online purchases don’t qualify for GST and tariff duty unless the total tax owed is $60 or more – meaning a purchase price of about $400. But goods such as clothes, accessories, and shoes attract both duty and GST, meaning charges may be payable when the purchase price exceeds $225, according to the New Zealand Customs Service.   Read more »

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The thin end of the Internet GST wedge has arrived

I’m not sure how Todd McClay thinks that breaking John Key’s ‘no new taxes’ pledge is going to help National but he has decided to bring in a tax on internet purchases anyway.

The Government is moving to slap the goods and service tax on online service purchases, which will mean a price rise for the likes of subscriptions to Netflix and Apple services.

It is proposing a law change which will require the overseas retailers to be GST-registered and for them to return the tax to the Government – which says it is now missing out on around $40 million a year and growing.

Currently if you buy anything worth less than $400 from overseas you don’t have to pay the 15 percent GST.

“It is about creating a level playing field for collecting GST and putting New Zealand businesses and jobs ahead of the interests of overseas suppliers,” Revenue Minister Todd McClay said.

The Bill was introduced to Parliament today and the Government hopes the law will be in place in October next year.    Read more »

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Anmol Seth: The missing $32k

bnz

CONMAN EXTRAORDANAIRE Anmol Seth assumed the identity of a client in an attempt to access their company bank accounts – but was caught out when he couldn’t answer any of the client’s security questions.

The revelations are contained in the findings of a BNZ investigation into the alleged misappropriation of nearly $32,000 from a hospitality company that went bust last year.

It’s another damning indictment against the self-proclaimed “billionaire of Flatbush” – a man accused of stealing millions from vulnerable and hard-working Indian investors.

A number of complaints against Seth have already been laid with Inland Revenue, BNZ and the Financial Markets Authority demanding action be taken against the Indian businessman for alleged money laundering and GST fraud.

There are also calls for a re-examination of the evidence in relation to the alleged misappropriation of nearly $32,000 from a hospitality company now in receivership after a failed hotel in the South Island last year.    Read more »

GST on online international purchases may have a nasty unintended backlash

Some economists are concerned a law change would be difficult to enforce, as does Consumer NZ. Chief executive Sue Chetwin says Customs commissions New Zealand Post to check the value of items coming into the country, but with more and more Kiwis going online to do their shopping, the sheer volume makes it impractical.

“The chances of you getting caught are going to be quite low… I know ignorance is no excuse, but you know, when you buy something online you won’t be scratching your head saying, ‘Am I being charged GST for this or not?’ You’ll just be paying the price… you will be breaking the law, but who’s going to know?”

While it would be easy to get large companies like Amazon and iTunes on board with collecting GST, they’re only two of thousands of online stores, and not all will have the technology – or will – to do it.

“They will have to know that GST is collectable in New Zealand, so presumably they’ll have to register somewhere to sell products in New Zealand… apart from that, it may well be they say, ‘Look, I’m sorry… this is just too hard. You’ll have to come to Santa Monica to buy the shoes,’ and they won’t bother to sell in New Zealand.”

New Zealand’s isolation makes it a unique case.

” New Zealand, I suppose, is like other countries but is also slightly unusual in that so much of our shopping is done overseas because there is a lack of choice here,” says Ms Chetwin.

“So when you look at the US, UK and Europe, they probably aren’t as big at shopping online overseas because domestically they can buy quite a lot with a lot of variety – much more than we can here.”

She agrees with Retail NZ that the Government’s initial strategy of focusing on digital services won’t do much to help local retailers, suggesting it might instead be aimed at boosting a flagging tax take.

“[The Government’s worried about its lack of tax take, so it’s deciding to roll it out. It looks at the moment it’s only a discussion document that we haven’t already seen yet, but it looks like it will be on overseas services to start off with, so not much help for New Zealand retailers.”

It’s nice to see someone else calling a spade a spade – this isn’t about protecting our retailers from the commercial realities.  This is about a government staring down an economy that’s slowing down.  And that means a lower tax take.  From that follows a persistent deficit.  And then you get the 2017 election that has a large tax cut bribery component as part of its “strategy”.

But somewhat more important to you and me, by the NZ government insisting on getting its value added tax on goods purchased via the Internet, overseas retailers and traders may put our country in the “too hard” basket and stop selling and shipping to our fair isles.

– 3 News

National softening public up for a new tax: GST on Internet purchases

Whichever way you twist this, it is something you’ll have to pay that you’re not paying now.  

Changes to online GST could be in the works with a discussion document set to be released and Prime Minister John Key is in favour of it.

Revenue Minister Todd McClay put the idea before Cabinet today, and Mr Key said while no decision had been reached yet, the document would discuss adding GST to online services such as iTunes and for importing goods.

Currently, Kiwis buying things online don’t have to pay GST on purchases under $400, which is the second-highest in the OECD.

It isn’t included on imported digital products such as music and films.

The Australian government, which has a threshold of AU$1000 for imported goods, is looking at reducing it to AU$20 or possibly lower. It has already introduced a 10 percent digital services GST which was announced in this year’s Budget.   Read more »

Key keen for us to pay GST on overseas online purchases, that will go down well

John Key seems intent on trying to stiff us all for more GST all to save a dying, outdated retail model.

Prime Minister John Key has indicated the threshold for paying GST could be cut to $20, or even zero, for internet services such as Netflix.

At present, most goods bought online from overseas costing less than $400 are GST-free.

Revenue Minister Todd McClay has confirmed he will take a paper to Cabinet this month on reducing that threshold.

Eugen Trombitas, a PriceWaterhouse Coopers partner and GST specialist, said one solution was to have the foreign seller registered so they comply with domestic tax laws.

“You could look at Customs collecting a little bit more, and there’s some efficiency gains through technology.    Read more »

One world order through commerce: taxing overseas sellers

Accountants are wondering whether the New Zealand government will move to tax millions of small parcels and services bought offshore in the May 21 budget, including digital downloads.

Australia acted on the issue in its budget a few days ago.

New Zealand Customs does not collect goods and services tax if the tax on the goods being imported is less than $60, and foreign providers of services do not have to account for New Zealand GST unless they are providing the services physically in the country.

Digital downloads such as movies, music, games and online subscriptions are effectively exempt.

New Zealand retailers and others are lobbying for change and the revenue minister is considering options.

PwC New Zealand partner Eugen Trombitas says separate solutions are needed for tax on goods bought offshore and services purchased offshore.

“In relation to goods, something like 12 million low-value parcels under the $400 mark are coming into New Zealand every year.”

Taxing them would be a massive amount of administration so any change must not cost more to administer than the tax collected.

Possible changes include cutting the threshold for GST to parcels containing goods worth $100. Read more »

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Paying GST on overseas digital Internet purchases – Fair or not? [POLL]

Online shoppers will find out within a few months whether they will have to pay GST on ebooks, music, games and television services downloaded or streamed from overseas.

Change appears increasingly likely after Australian treasurer Joe Hockey confirmed Australia would start charging GST on digital imports.

New Zealand Revenue Minister Todd McClay said a report into the steps other countries were taking to collect such taxes had been completed and he expected to “make recommendations to Cabinet within the next few months”, he said.

The report had also looked at the controversial tax-free threshold on physical imports, which currently means people can buy items worth up to $400 from overseas websites free of GST.

Although extending GST to digital services and more overseas online shopping purchases is likely to prove unpopular with many consumers, McClay hinted the Government was prepared to bite the bullet, at least on the former issue. Read more »

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