GST charged on online shopping has arrived

Purchases through overseas online retailers are subject to GST from 1 December 2019. From that date, most overseas businesses that sell goods to New Zealand consumers are required to charge GST on products valued at $1,000 or less.

Consumers in New Zealand will pay GST on goods valued at or below NZ$1,000 (low-value goods) when they place an order with an overseas supplier. This means from 1 December 2019, consumers will generally:

• pay a little more for most goods that cost less than NZ$400 because GST will now be charged, and

• pay less for most goods that cost between $400 and NZ$1,000 because tariff duty and cost recovery charges will be removed for parcels or consignments below NZ$1,000.

Note: Cost recovery charges collected by Customs include Customs’ import entry transaction fee and the Ministry for Primary Industries’ associated biosecurity system entry levy.

Examples of low-value goods include books, clothing, cosmetics, shoes, sporting equipment and electronic items.

Who needs to charge GST on low value imported goods?

The following may need to register for and charge GST if they are selling or supplying goods to New Zealand consumers as:

• sellers, retailers and merchants that sell directly to New Zealand consumers

• online marketplaces through which businesses sell goods and services, or

• re-deliverers that offer mailbox redelivery and personal shopping services from other countries.

Exceptions

The changes do not apply to:

• goods sold to New Zealand GST-registered businesses making business-related purchases with some exceptions

• supplies of fine metal, and

• alcohol and tobacco products where GST, excise taxes and customs’ duties are applied at the border regardless of value.

An overseas GST-registered business can choose to charge GST on a sale to a New Zealand GST-registered business if both of the following apply:

• the value of the supply is NZ$1,000 or less, and

• in the 12 months after the sale, the business expects that more than 50% of all its sales to New Zealand customers will be made to non-GST registered customers.

Registering for GST on low value imported goods

Overseas businesses, online marketplaces and re-deliverers need to register for GST when their total supplies of goods and services to New Zealand consumers either:

• were NZ$60,000 or more in the last 12 months, or

• will exceed NZ$60,000 in the next 12 months.

Total supplies are all sales to New Zealand consumers that GST applies to including:

• low-value goods valued at NZ$1,000 or less each

• online services and digital products such as e-books, software downloads and streamed moves and music, and

• services such as delivery, insurance and fees.

Goods valued at over NZ$1,000 are not included in the total supplies. Supplies to New Zealand GST-registered businesses should also not be included.

Charging GST on high-value goods

Items and consignments with a combined value exceeding NZ$1,000 will have the following charges applied at the border:

• GST (if it has not already been collected by the overseas supplier, marketplace or re-deliverers )

• tariff duty (if the items attract duty)

• an import entry transaction fee (IETF), and

• a biosecurity system entry levy (BSEL).

If GST on the value of any items has already been collected by the supplier, GST will still be payable on any tariff duty payable.

Tariff duty will be charged on all individual items (of low or high value) that attract duty if they arrive in a consignment valued over NZ$1,000.