Books, electronics and clothes you buy online from overseas retailers are destined to be taxed the same way as stuff you buy down the road.
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At present, online purchases with a value of more than $400 have GST and tariff duty collected at the border. That won’t change. But the government is proposing that, from October next year, purchases valued at or below $400 will also be subject to GST.
Overseas retailers will be tasked with collecting the tax at the point of sale íf they earn more than $60,000 a year from supplying goods to Kiwi consumers.
Tariff duties will no longer apply to low-value goods. These duties currently kick in at the border if the total tax payable is above $59. The cost of collecting anything below $60 outweighs the revenue earned.
Details are still being worked through. The government is consulting on options.
The government says it wants to level the playing field. Overseas retailers have been able to avoid paying GST but high street retailers can’t, making it harder for them to compete. The rapid growth of online shopping also has implications for the government’s coffers: more consumers buying goods offshore ultimately means less GST is collected.
You can find Inland Revenue’s discussion document at taxpolicy.ird.govt.nz. Submissions close 29 June.
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