New Zealand: Update on bill including GST measures KPMG United States

new zealand gst

Travellers arriving on airlines or private craft are charged a Customs levy of NZ$16.59 and a biosecurity levy of NZ$16.92. © 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. New Zealand introduced a Goods and Services Tax (‘GST’) on 1 October 1986. This is similar to VAT, and based on the OECD’s standard indirect tax regime model.

new zealand gst

TSI is essentially a list of information you need to provide to your GST registered customers. Most of the required GST information should already be included in your tax invoice. TSI is required to be issued within 28 days of a request being received for a TSI.

New Zealand Arrival and Departure Tax

You must request and pay for an NZeTA before you travel to New Zealand. There are two ways of paying for the NZeTA and IVL, either through an Immigration New Zealand app or their website. The cost is NZ$9 through the mobile app and NZ$12 through the website.

If you buy goods or services from an unregistered person, they will not charge GST. For some special supplies, such as secondhand goods, you may still be able to claim a GST adjustment. You’re likely to be charged GST on most supplies you purchase for your taxable activity.

This can simplify business processes and may be the preferred option for many businesses. If you choose to only collect GST on low-value goods, then the information must be itemized so the customs officials know to collect GST on high-value goods at the border. If no information is provided on the invoice, customs officials will default to collecting GST on all products when the combined value is over 1,000 NZD, which may result in double taxation. The first option is much more complicated and not recommended for most ecommerce merchants.

If your business is registered for GST, you can claim back the tax that paid on goods and services that you purchased to produce goods or services as part of your own business. That new piece of GST legislation mirrors similar rules governing the supply of digital services introduced in the European Union (EU) in January 2015 on the taxation of digital goods. If you are required to collect and remit GST, you will also be required to supply New Zealand customers with an appropriate receipt that notifies them of the GST applied to their order. Collecting GST at checkout on all goods will be the most reasonable method for most ecommerce merchants.

Claiming GST if you do not make taxable supplies in New Zealand

The new rules would allow a wider range of invoicing practices to be adopted (e.g., e-invoicing systems). Although the OECD work suggested various options (including educating sellers and information sharing), New Zealand’s draft rules are wide and will be based on a full GST liability model. New Zealand’s closest neighbor, Australia, is opting for an information sharing model, yet to be implemented. Other countries, like Canada, tax platforms in a targeted way (short-term accommodation) and allow certain facilitation fees to be zero-rated. India applies GST to ride shares and food delivery services purchased through apps. You can only claim GST on goods and services to the extent they’re used in your taxable activity to make taxable supplies.

The existing rules bring in annual GST in excess of NZ$300 million ($184 million). Officials estimate that the New Zealand gig economy is close to NZ$2 billion (regulatory impact statement, finalized May 25, 2022) so the new measure is likely to add how to lose weight while biking every day significant new GST revenue. You must keep taxable supply information for any supplies you receive. The amount of GST you claim (input tax) is subtracted from the amount of GST you charge (output tax) to calculate your tax to pay or GST refund.

This will allow for a more straightforward calculation that will be easier to understand for both the merchant and consumer. To calculate the amount of GST to collect, apply 15% to the selling price of the goods and any shipping, insurance, and service costs. If your business is below the 60,000 NZD threshold, then you do not need to do anything. Duty, GST, and fees will be collected at the border on shipments over 1,000 NZD or for any shipments with alcohol and tobacco of any value.

2.7 Historically, the majority of imported goods have been imported by commercial entities in consignments above the de minimis. When GST was introduced in 1986, very few final consumers imported goods https://accountingcoaching.online/ below the de minimis. Therefore, the compliance and administrative costs involved in taxing imported goods below the de minimis was considered to outweigh the benefits of taxation at that time.

  1. When you are registered you add GST to your prices and pass the GST on to us.
  2. This process would be messy and prone to problems for most merchants, but if you feel this method is best for your business, then the New Zealand website provides more information.
  3. Under the GST rules, exports are zero-rated, meaning GST is charged at a rate of zero percent and businesses can claim the GST back on the cost of their inputs.
  4. Even if you are not required to make any changes, you should still be aware of these additional options as your suppliers’ invoicing practices may be changing, which could impact the way you operate your business.
  5. If you have registered with the IRD, you have to charge GST at either 15% or 0% when you sell a taxable supply (depending on whether the supply is “zero-rated” or not).

If you are not sure whether your business will meet the turnover threshold, but you estimate it might, you can voluntarily register for GST. This option is a good idea if your estimate is close to $60,000 a year (or $5,000 per month), as you can be charged penalties if you fail to register when you are required to do so. You will need to charge GST on your supplies of goods and services and pay it to Inland Revenue. You will also be able to claim back the GST you incur on your business expenses.

New Zealand GST Calculator

Estimate a fair and reasonable percentage when you first get the goods or services. There are 2 ways to adjust your claim, the apportionment method and the principal purpose method. Our handy online tool will help you decide on the records you need to keep when you buy or sell goods or services. [5] Certain supplies are levied at a rate of zero percent (see sections 11 and 11A of the Goods and Services Tax Act 1985). Travellers departing on a cruise ship are charged a Customs levy of NZ$4.55. Travellers arriving on a cruise ship are charged a Customs levy of NZ$11.48 and a biosecurity levy of NZ$10.58.

2.13 There are a number of reasons why New Zealand consumers might purchase goods online from offshore businesses, however, the tax treatment should not be a factor in consumers’ purchasing decisions. 2.10 In general, the increasing ability to easily purchase goods and services online has benefited New Zealand. It has given consumers greater access to a wider range of goods and services from around the world, and increased competition in the domestic retail market. Increased competition tends to encourage the efficient use of resources, which can result in lower prices, greater innovation, and better quality goods and services for consumers.

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[6] The key exemptions are supplies of residential accommodation and business-to-consumer supplies of financial services. 2.18 While it is difficult to estimate the total revenue foregone resulting from the non-collection of GST on low-value imported goods with certainty, it is clear that the numbers are significant and a growing concern for Government. If you have worked in New Zealand as part of a working holiday visa, student visa, work visa or for whatever reason, you are entitled to a tax return (tax refund) on some of the taxes that were deducted from your wages. There are two “tourist taxes” that visitors are expected to pay, one is mandatory for all visitors while the other depends on what type of visa you are on. No, as a visitor, you cannot claim GST back once you have paid for it.

New Zealand is not alone in considering VAT/GST and the gig economy. Note 4 at the end of this version provides a list of the amendments included in it. Find out more about low value imported goods or what to do if you get charged GST twice. From 1 December 2019 you will need to pay GST on goods valued at or below NZ$1,000 you buy from an overseas supplier. You will also need to choose your GST filing frequency and your accounting basis.

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