GST on overseas on-line purchases – should we pay?

Date: 28th July 2013

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At this point in time consumers do not have to pay GST on goods purchased overseas valued at $400 or less.  With the huge amount of choice, the small price tags, the absence of GST, and the high value of the NZ dollar, shoppers are hitting the overseas on-line shops more than ever before.    The government has set up a working group to determine whether GST could feasibility be charged in these circumstances.    Let’s look at the two sides:

Local retailers are crying unfair competition and want an even playing ground.

BUT many consumers say that adding GST to their overseas purchases won’t deter them from shopping on-line anyway – the price is still going to be cheaper – with a greater selection and often more convenience than buying locally.

New Zealand is potentially missing out on tax of around $300 million.

BUT the administration involved in collection may outweigh the tax revenue.  The government admits there is no easy way to collect the tax. Credit card companies are not equipped to collect tax on cardholder transactions and we probably cannot rely on overseas retailers to collect and remit, or rely on the consumer to voluntarily declare their purchases.  There appears to be no existing precedent and the Australian and UK governments are currently struggling with how to introduce such a system too.

It may not be fair to all concerned but until a practical solution on collection is determined, we will probably have status quo.  We’ll keep you posted on the out-come of the IRD-Customs working group.  In the meantime, check the finer details of the current customs rules at consumer.org.nz  or whatsmyduty.org.nz and shop till your fingers drop!

 

Image courtesy of Stuart Miles FreeDigitalPhotos.net



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