Kiwis to be hit with tax on online purchases

Worker at an Amazon fulfillment centre in Baltimore applies tape to a package before shipment. Labour will be bringing in GST on good bought online. Photo / AP

Online shoppers can expect to start paying GST for all goods they buy from overseas after Revenue Minister Stuart Nash said he would "absolutely" extend the law to cover goods as well as services.

Nash told Newstalk ZB this morning that the National Government had not gone far enough when it introduced the so-called "Netflix tax" to gather GST on services and electronic purchases such as movies, e-books and music.

He said that gave an unfair advantage to overseas sellers over New Zealand sellers.

"It gives a 15 per cent competitive advantage to [retailers] overseas. While our retailers had to deal with GST, overseas people didn't. It's the right thing to do."

The Netflix tax kicked in last October, requiring sellers such as Apple to charge GST on online purchases from New Zealand.

It came after a review in 2015 found the Government was missing out on about $180 million a year by not collecting GST on online purchases, including $40m from shopping on iTunes, Netflix, Spotify and other online services.

However, that did not impact on purchases of goods from overseas which were worth less than $400. GST has long been charged on goods worth more than that.

It follows moves by Australia to require New Zealand companies such as TradeMe to collect Australian GST on purchases sent to Australian consumers.

Currently no GST has to be paid on imported physical goods worth less than A$1000 ($1109).
Under the change, New Zealand retailers, suppliers or manufacturers who sell a total of more than A$75,000 worth of goods directly to Australian consumers will have to charge Australian GST (10 per cent) on those purchases, including those under A$1000.

Nash's commitment to start collecting GST on those purchases was welcomed by Retail NZ spokesman Greg Hardford, who urged Nash to align it with Australia's move from 1 July 2018.

Harford said local retailers had long been at a disadvantage to overseas sellers.

"This is the first time that a Revenue Minister has committed to fixing this issue, and we want to congratulate Mr Nash on his leadership," Harford said.

"The issue is becoming more pressing as online shopping grows in popularity, and as Amazon is about to move into Australia. It's just not right that Kiwi businesses that employ New Zealanders and keep our communities vibrant are taxed, while massive foreign corporations don't pay their share of tax for doing business here."

National's revenue spokeswoman Judith Collins said Nash was yet to provide any details and would find it more complicated than he seemed to expect.

"I think he's enthusiastic. Enthusiasm is an excellent thing in a puppy, but probably a minister needs to be a little less."

National had done some work on the issue when it was in Government.

"One of the issues we had was that if you are going to put on GST for low-value good which we were committed to doing, then you also needed to remove the tariffs still remaining on those low value goods otherwise consumers would be paying more than they should be."

She said Customs paid for its administration and inspection costs out of the money it collected in tariffs, so that had to be dealt with as well.

"He doesn't have the detail and he's probably not quite across the issues with Customs."