It can equate to a parcel with a much lower value when tariff duty applies or if the freight and insurance costs are high.[8] Tariff duties of five percent or ten percent apply to a range of goods, including some apparel and footwear. Cost recovery charges of $49.24[9] also apply to goods above the de minimis threshold stopped at the border. SCI is essentially a list of information you are required to provide to a GST registered customer to correct an error in the TSI.
- In this example, Tim has paid $3,900 worth of GST on the necessary items to run his fishing operation in December.
- 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.
- “Continuing to rely so heavily onhousehold and business rates is not a sustainable fundingapproach for local government.
- If you use the ratio option to calculate your provisional tax, you can only file in myIR or by paper.
- If making taxable supplies is not the principal purpose of the good or service, you cannot claim any GST.
You cannot claim GST for supplies you use privately or to make exempt supplies. 2.26 The success of an offshore supplier registration system to collect GST on cross-border services and intangibles illustrates that such a system is effective and relatively easy to comply with. 2.19 Government revenues pay for important public services such as education, healthcare, roads and superannuation. Given that over thirty percent of total tax revenue is collected from GST, an increasing gap in that revenue base becomes a concern for everyone who relies on these services. A shortfall in GST revenue may eventually have to be paid for by tax increases or spending cuts. Apparel attracts a ten percent tariff duty where New Zealand does not have a free trade agreement with the country of the goods’ origin.
This amount can be offset against the $54,750 GST collected total to determine the net GST payable. Calculating GST in New Zealand remains straightforward despite the rate change. The calculation is based on the ‘base’ value – the price excluding GST for adding GST, or the total price including GST for determining the tax component. For simplicity, let’s consider a base value of $100 in our examples.
Who else can file your GST return
When you are registered you add GST to your prices and pass the GST on to us. [6] The key exemptions are supplies of residential accommodation and business-to-consumer supplies of financial services. 2.22 The legislation also required an inquiry by the Australian Productivity Commission on the effectiveness of the rules and other possible models for collecting GST on low-value imported goods.
Goods and Services Tax (New Zealand)
The Australian Productivity Commission completed its inquiry on 31 October 2017 and concluded that the legislated model was the most feasible option at the present time. 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. 2.12 The current policy settings place domestic suppliers of goods at a competitive disadvantage compared with offshore suppliers that are able to transport low-value goods directly to their customers without the imposition of GST. This is having the greatest impact on domestic sellers that provide goods that are similar to goods sold from offshore (or substitutable products). 2.3 New Zealand’s GST system is regarded throughout the world as a model consumption tax.
This is similar to VAT, and based on the OECD’s standard indirect tax regime model. It is one of the most progressive regimes in the world, with a wide base and limited exemptions. Plus, for more information on work taxes, check out our guide to the New Zealand Work Tax System. You must request and pay for an NZeTA before you travel to New Zealand.
If you receive a letter saying you have not filed your GST return
The Bill includes several remedial changes to the legislation passed to introduce comprehensive changes to the existing GST invoicing rules (which come into effect from 1 April 2023). The rules as currently drafted have resulted in certain unintended consequences, creating confusion on the information requirements. On 1 October 2016, the taxation of digital (‘remote’) services supplied by offshore companies (non-New Zealand) to consumers based in New Zealand changed. She collected $2,850 in GST through her design services but also paid $330 in GST on business-related expenses. This means, for her May operations, Sarah will need to remit $2,520 to the New Zealand Inland Revenue Department (IRD) as part of her GST return.
In this more detailed example, John has a net GST payable of $50,850 for the period. This is the amount of GST he is required to remit to the New Zealand IRD when he files his monthly GST return. Understanding the base sales price excluding GST is essential for businesses, as it allows them to calculate the net GST they need to pay or claim back. The shift to a 15% GST rate has implications for cash flow, affecting how businesses manage their finances. Wholesalers, for example, often display prices without GST but charge the total amount, including tax, at the point of sale.
Adjusting your claim when supplies are put to both business and private use
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 significant new GST revenue. You pay a 15% goods and services tax (GST) on most of your purchases in New Zealand. “Continuing to rely so heavily onhousehold and business rates is not a sustainable fundingapproach for local government.
The Goods and Services Tax (GST) in 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. Again, see the guide mentioned above for instructions on how to pay. Established in 1986, the Goods and Services Tax (GST) is a tax on almost anything you purchase in New Zealand. It is an inherent part of your trip here, whether you notice it or not. If you regularly sell goods or services you might need to charge GST to your customers.
Please note the comments above are for ordinary transactions subject to GST. Different rules may apply to imported goods or services, or acquisitions from non-GST registered person. There could be other practical implications as a result of the new GST invoicing rules being implemented. Please contact our KPMG GST specialist team if you need further guidance. These are different from exempt supplies, which do not attract GST to begin with.
On occasion, you may pay GST to your suppliers when you buy supplies for your business activities. However, unlike regular consumers, you can claim this back if you have registered with Inland Revenue (IRD). The proposals also include introduction of the “flat rate” regime for the benefit of underlying suppliers online tax id application filing for businesses and entities who are not registered for GST purposes (for e.g. on the basis they do not exceed the GST registration threshold). For completeness, suppliers of these services who are registered for GST will continue to take input tax deductions for the GST on their costs in making these supplies in the usual way.
Your business carries out a taxable activity when you supply (or intend to supply) goods or services for money (or another reward) on a continuous or regular basis. The Goods and Services Tax (GST) in New Zealand is a comprehensive value-added tax applied to most products and services. Introduced in 1986 https://intuit-payroll.org/ by the Fourth Labour Government, GST initially had a rate of 12.5%. This tax, primarily managed by the Inland Revenue Department, is usually filed every one, two, or six months, depending on the business’s preference. If you buy goods or services from an unregistered person, they will not charge GST.
Even though registering means extra work for your business, it has some advantages. This measure would take effect in New Zealand from the 2024 calendar year, with the first information reporting obligations (and exchange) occurring in early 2025. There are a number of practical issues to note, especially in relation to the boundary issues inherent in the draft rules and the potential systems changes. The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated.
If you do not choose a taxable period when you register, the IRD will automatically assign you the two-monthly period that matches your balance date. This is the last day of an accounting year which, for most New Zealand businesses, is 31 March. Your taxable period (also known as filing frequency) refers to how often you need to file your GST returns with IRD. 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.
2.17 Since then, further work has been undertaken by officials using a mixed dataset that includes Customs’ sample data of goods coming across the border. An estimate was calculated based on an assessment of the value of goods under the current de minimis. This work conservatively estimates that the foregone GST revenue for the 2016 calendar year was around $80 million. Assuming a foregone revenue growth rate of ten percent a year, the foregone revenue is projected to grow to $127 million by 2021. 2.11 Despite these benefits, when GST does not apply evenly, it may bias consumer and business decisions, which could lead to unfair and inefficient outcomes. 2.6 Depending on freight costs, the $60 de minimis roughly equates to a parcel worth $400 if GST is the only duty applying.