Online shoppers' choice: Buy now, or wait for the costs to become clear

Purchases made online can sometimes get stuck at the border. Photo/Getty Images.

Online shoppers have a choice when buying from overseas websites - check on any hidden charges before clicking to buy, or wait a few months for the costs to become clearer.

Christchurch woman Evelyn Slape is one who has been caught out by unexpected extra costs. She placed an order on Boohoo.com two weeks ago, spending about $380 on winter jackets and other clothes, but was shocked to find the parcel with her goods was being held by Customs, and she may have to pay hundreds of dollars to have it released.

"I noticed it was taking a lot of time to get here and then I noticed I had an email from NZ Customs saying that I need to pay $68 and it kept outlining other ongoing expenses [payable]," Slape told the Herald.

She is now waiting for the final invoice, which will include the Customs charge, duty and other fees. This will have to be paid before the parcel is released for delivery.

Customs' fee for processing the parcel is $68. Slape said she had since done some research and believes she will have to pay $150-$250 to get the parcel released.

"[I] probably wouldn't buy things online if I knew there was going to be potentially $250 slapped on top of that," she said.

"I think there'll be a lot of people that get stung that probably can't afford to get it released."

The cut-off amount before having to pay Customs and duty charges for online shopping is generally goods worth $400 - but that depends on what you are buying.

If you are purchasing clothing, jewellery, footwear or sporting equipment that limit comes down to $225. You can check the duty payable before making a purchase by using the calculator on the Customs website.

Retail NZ interim chief executive Greg Harford said the charges associated with online shopping were complex as there were no firm limits and fees often depended on the type of product being imported.

The $225 limit for apparel and clothing purchases is because of the duty charges added to those products, Harford said.

"The way it works is that there isn't actually a threshold - the threshold is a byproduct of the current rules. The current rules say if there is more than $60 worth of tax and duty payable, that's when Customs will hold the goods at the border."

"Sixty dollars worth of tax and duty payable translates to about $400 for items that don't have duty on them and about $225 for items that do."

There is no threshold for tobacco or alcohol products.

Duty and tariff are essentially different names for the same fee - a tax imposed per order.

A Customs charge, which is the fee Customs charges for the job of processing a parcel, is roughly $50. GST of 15 per cent is then added to that. The result is that if you order an item of clothing worth $225, when it crosses the border you will then be charged both duty and GST, plus the Customs charge.

From October 1 this will change and the "hidden charges" payable to Customs will no longer be charged.

Consumers will then pay GST at the time of a purchase, with the 15 per cent being added to the total checkout price at some retailers. This will apply to almost all items coming into the country.

From October, when new legislation is introduced, if the total purchase is worth more than $1000 you won't pay GST at the time of purchase. In that case it will be payable when the goods arrive in the country.

Duty and Customs charges will not be applied to orders worth less than $1000.

"For pretty much everything, you'll be paying GST at the time the purchase is made and the items should flow through seamlessly across the border," Harford said.

"Our understanding is the $50-odd Customs charge will no longer be collected on items worth less than $1000. And duty won't be collected on items worth less than $1000."

Retail NZ interim chief executive Greg Harford. Photo / File

Duty charges would still be an issue for retailers who import large quantities of products to sell, but consumers will generally be able to make purchases online with ease and without fear of unknown charges, he said.

"The Government's move on GST is a really significant step and it deals with the bulk of the problem that does currently exist ... but there is still a bit of work that needs to be done around reducing tariffs that are applied to shipments that are coming into the country," Harford said.

"If the retailer is importing products to sell, those items will have duty on them applied at the border so again the retailer in New Zealand has still got a competitive disadvantage compared to, say, the warehouse in China that might be servicing the consumer directly."

Packages on a conveyor ready for delivery at German postal service DHL transit centre. Photo / Getty

The coming changes to online shopping rules would benefit consumers more than businesses, he said.

"It will be much less confusing for the customer and in almost all cases they will know that the goods can come straight into the country, and customers won't be surprised by having goods stopped at the border or by the taxes, charges and duties that customs will levy - it will be much simpler for everybody."

Incoming legislation would level the playing field among domestic and overseas online merchants, Harford said.

"Retailers here have long been disadvantaged by the fact that government tax policy has discriminated against New Zealand firms and taxed New Zealand firms while foreign websites selling into New Zealand have got away scot-free."