The current practice is that when goods are shipped to New Zealand in consignments valued at less than $400, they are allowed to pass through New Zealand Customs directly to the customer. The reason for this is that stopping the goods and imposing a GST charge of up to around $60 is not considered economical.
However, with small imports into New Zealand increasing, largely from Australia, New Zealand retailers are getting uppity about not being able to compete with these imports which, for the most part, are effectively GST free to the New Zealand customer, providing these businesses with an unfair advantage.
The good news for Australian businesses exporting into New Zealand is that the new rules will only directly affect you if your sales to New Zealand consumers has or will likely exceed NZ$60,000 in a 12 month period and the product is shipped into New Zealand in consignments valued at up to NZ$1000.
We mention here sales to “consumers”. Sales to New Zealand businesses, who are registered for New Zealand GST, will not be impacted by this change.
Consignments exported to New Zealand of more than NZ$1000 will continue to be subject to New Zealand GST being charged by New Zealand Customs. They will also continue to charge GST and excise duty on products such as alcohol, irrespective of the value.
New Zealand doesn’t want to impose compliance obligations on Australian businesses who are selling to New Zealand businesses. It would seem rather pointless requiring an Australian business to register for GST, charge that GST to a New Zealand business who then simply claims that GST content back on their next GST return. Consequently, if you are selling to both New Zealand consumers and businesses, you will need to identify the sales made directly to consumers to see if your sales exceed the threshold.
You should be aware that being registered under this provision will not entitle you to claim any New Zealand GST. This will simply be a case where the Australian business will register under this provision, charge the New Zealand customers 15% GST and remit this gross amount to New Zealand’s tax authority, Inland Revenue. There will be no provision to claim any GST back. You will be a pure tax collector.
You should not charge New Zealand businesses GST. If you do charge the GST, the New Zealand business will be expected to ask for a refund from you rather than claiming the GST content on their next return. That’s how it is looking at this stage anyway.
Therefore, we suggest you put systems in place that require customers who are New Zealand businesses and registered for New Zealand GST to provide their GST number or, alternatively, their NZBN.
You will also need to put in place systems that ensure you can identify the location (which is likely to be the shipping address) of your customers so that you can determine the value of sales to New Zealand customers who are not New Zealand businesses.
Australian businesses will be able to start registering for this New Zealand GST regime from 1 September 2019 with GST to be collected from 1 December 2019.
If you are incurring New Zealand GST, you will probably be looking at other options and you should contact us for more on that.
These changes only relate to Australian businesses selling to New Zealand consumers in consignments of less than $1000. If you are providing digital services to New Zealand consumers, you may well come under other provisions, so it is always recommended that you seek advice.
You can give us a call on 1300 791 600 for a quick chat.
The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.