New Zealand businesses are being warned to get ready to charge GST on all exports as Australia gears up to change its goods and services legislation.
Australia has updated its GST legislation on low-value goods, meaning Kiwi businesses will be required to charge 10 per cent GST, effective from July next year, if they have sales of more than A$75,000 ($83,000) a year to consumers.
Currently, imported physical goods under A$1000 are not subject to GST.
Deloitte tax partner Allan Bullot said Australia's new legislation could be challenging for small retail businesses, who will need to advertise payable GST.
"If you're a New Zealand retailer, supplier or manufacturer, selling directly to end consumers in the Australian market, and you sell a total of more than A$75,000 of sales into Australia in any 12-month period and any of those goods which are less than A$1000, you will have to charge Australian GST when you make that sale," Bullot said.
"Even though you have no physical presence in Australia you will have an obligation to return Australian GST at 10 per cent ... you want to be charging that 10 per cent GST when you're making the sale."
This meant New Zealand businesses needed to make sure they had the software in place to charge customers accordingly, Bullot said.
"It will certainly be a challenge for smaller retailers."
It was important to acknowledge that micro retailers selling into Australia would not be affected, he said.
Bullot hoped that New Zealand's low-value goods legislation would follow suit.
"It's certainly going to be the last summer from an Australian perspective - the question remains to be answered whether is it also the last summer for New Zealand consumers."
In New Zealand the Customs Service screens incoming parcels to make sure the right amount of tax is paid on imported goods. Charges of less than $60 in GST and duty are waived.
Retail NZ estimates the Government is missing out on $235 million of GST per year, or $5.8 billion over the next 10 years.
"Government's inaction on it over the last nine years has been a real disappointment for most New Zealand retailers," said Greg Harford, general manager of public affairs at Retail NZ.
"We're hoping that the new Government will act sooner rather than later ...
"It's a huge issue for retailers because there's an automatic price disadvantage of at least 15 per cent to online retailers, and potentially more than that in some cases because there's duty on some goods. There's some quite big price disadvantages which are imposed on Kiwi retailers by nothing other than Government tax policy at the moment."
The Crown was also missing out on a lot of money.
"The issue is getting worse over time because the volume of online commerce is growing and New Zealand retailers are losing market share. They had about two thirds of the online shopping market four years ago but it is down to 55 per cent now, and we're forecasting that next year it will drop below 50 per cent."
Making changes to GST legislation was a "no-brainer".
"From our point of view it is ... an easy win for the Government to fix, they just need to pass a very small piece of legislation and all of a sudden they will have a significant revenue stream coming in.
"The absurdity of the current situation is that Amazon selling an e-book to a New Zealander now has to charge GST, but not on a physical copy of the same book."
The Herald has approached Revenue Minister Stuart Nash for comment.