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GST on low-value imported goods

November 29, 2018

Earlier this year the Government announced its intention to change the GST treatment of low-value imported goods. Although not a new tax, this proposal has been called the “Amazon tax” in the media, because overseas internet-based retailers, such as Amazon, are the target of the rule change. The Government has now announced the details of the changes that are to apply from 1 October 2019.

Currently, no GST is imposed on goods imported into New Zealand with a value of $400 or less, although in some cases they may attract import duties and a customs charges. Under the proposed changes, offshore retailers would need to collect and return GST in New Zealand on goods valued at $1,000 or below that they supply to customers in New Zealand. The original announcement had set the threshold at goods costing $400 or less, in line with the existing threshold. However, following consultation the $400 threshold was considered too low and the Government has settled on a $1,000 threshold. This is in line with the equivalent Australian GST rule that also applies to goods costing $1,000 or less.

Goods costing $1,000 or less will not be subject to import duties or customs charges. Therefore, despite being required to pay GST on imported goods, you may find that some goods end up costing you less due to the removal of duties and customs fees. For goods costing over $1,000 there is no change; customs will continue to collect GST at the border, impose duties (where applicable), and charge customs fees.

If you are GST registered and buying goods from overseas for your taxable activity, provided you notify the offshore supplier of this fact, you will not be subject to GST on goods costing $1,000 or less. However, if you decide to use those goods for a private purpose or making supplies that are exempt from GST, you will be required to pay GST to IRD when you change the use of the good.

Therefore, this year enjoy your last year of GST free Christmas shopping from offshore retailers, because next year you will be paying GST on those purchases.

Stephen Richards

Technical Director - Tax Advisory