17 Jul NZ to Charge the World GST – How Does this Affect Your Business?
Back in May 2017 we posted an article about how Australia was going to support local businesses by charging GST on imported goods (CLICK HERE for ths post). Now New Zealand is planning to do the same thing.
“So what?”, we hear you say.
If you sell low value goods into New Zealand then these are currently exempt from GST in New Zealand. Low value goods are those goods that have a GST value less than NZ$60, depending on what you are selling this would mean a sale price of NZ$400 (or NZ$230 in some instances where the GST rate is higher than the standard 15%). If that exemption applies to you then your saving can be passed onto your customers giving you a competitive advantage over the Kiwi’s.
If your business trades on that competitive advantage then you may find you will be required to register for GST in New Zealand and unless you can pass the additional cost on to your customers, your market could be significantly reduced.
How the NZ GST on Imported Goods Will Work
If you sell goods (or services) into the New Zealand marketplace AND your turnover in New Zealand is NZ$60,000 or greater then you will be required to register for GST with the New Zealand Tax Office, the Inland Revenue Department (IRD) and pay the GST collected. Even if your turnover does not reach NZ$60,000 then the changes may affect you.
We should also point out two things here:
- If you currently sell goods into New Zealand with a value greater than NZ$400 you should be declaring those goods on your import documentation and will be paying GST and Customs levies through that process. That process will continue BUT only for goods above NZ$1,000. Therefore:
- If you are typically selling goods worth say NZ$600 then you will no longer pay GST and Customs levies through that process but will have to register for GST in New Zealand. That should mean a reduced cost for you as you will no longer have to pay the additional customs charges. Whether the cost of preparing and lodging your GST returns replaces that as a costs will depend on how you intend to complete those documents.
What Should You Do Now?
This change will take affect from 1 December 2019 so there is still time to get things in order. If the changes affect you then you may need to update pricing, educate your customers, consider how you are going to register and lodge your NZ GST returns, and ultimately consider whether or not you wish to stay in the New Zealand marketplace.
We can help you with these issues and provide guidance on your New Zealand GST obligations. For more information call our office on (07) 5448 9600 or drop us an email at email@example.com.