As expected the law change for online purchases from overseas non-resident businesses comes into effect on 1st October.
At this stage the collection of GST will solely be for “remote” supplies and services i.e intangibles including digital downloads but also extending to services such as consulting and advice delivered from non-resident businesses.
You can however be excluded from the GST tax basket if you are New Zealand GST registered as long as the supplies or services are part of your taxable business, and you have provided your GST number.
GST advertently charged to you as a GST-registered recipient
If you are in this category and the payment for supply or service is more than NZ$1000 you can directly seek a refund from the supplier. However In the case of payment being NZ$1000 or less (including GST) you will need to seek a full tax invoice from the supplier to allow for an adjustment in your GST return. The rationale for this is the cost of the supplier issuing a refund may exceed the cost of issuing a tax invoice.
Any non-GST registered resident would only skip the net under the new law changes if the off-shore company exports no more than NZ$60,000 worth of goods per annum whereby they are not required to be registered to collect GST from New Zealand buyers.
Services include supplies of digital content:-
- TV Shows
- Music, and
- Online newspaper subscriptions
Online supplies of software such as:
- Apps (including Netflix and iTunes).
- Word processing software.
The new law has been implemented to address the imbalance between the taxing of New Zealand goods and supplies and the hugely untapped and exempt online importing industry. While the current tax net applies only to “remote” services on the basis that this is easier to implement “Phase Two” will consider the measures needed to extend the net to online imports of physical purchases.