The hidden costs of online shopping

The price advertised on an overseas website doesn't always represent the true cost Kiwis have to pay. Photo / 123RF

Nabbing a bargain is part of the attraction of online shopping but some Kiwis are being stung with hefty tax bills for overseas purchases. The total charges totals tens of millions.

In 2016 New Zealanders paid more than $31 million in GST and duty on 248,466 personal imports - the vast majority online shopping purchases - a slight increase on 2015's nearly $30m from 267,473 imports.

Meanwhile, tax charges were written off on more than 7 million other parcels coming into the country last year because the amount owing on them was below the minimum that could be collected.

The Customs Service screens incoming parcels to make sure the right amount of tax is paid on imported goods. Charges less than $60 in GST and duty are waived but bills of $60-plus must be paid before Customs will release them.

The amount owed is calculated at 15 per cent GST on the goods, plus duty, freight, insurance and levies payable, and a $49.24 entry transaction fee if the total is more than $60.

This means the price advertised on an overseas website doesn't always represent the true cost Kiwis have to pay.

If the person bringing in the goods owes $60 or more in tax, New Zealand Post or their chosen courier company contact them and they have 20 days to pay. Failure to pay the bill usually means the package will be returned to the sender.

However, because the importer is only notified of the charges once the goods arrive in the country and not at time of purchase, they sometimes come as a surprise.

Regular online shopper Lucy Hayward of Auckland was unaware of the duty and GST charges when she bought clothing from an Australian website.

She told the Herald on Sunday she ordered several items worth about $400 in total that ended up costing closer to $600 after factoring in the $200 in GST and duty charges she paid.

Hayward said she only realised she would have to pay the fees on her new clothes when she got a call from a courier company telling her she owed them money.

"I was really surprised and very unhappy about it."

A university student at the time, Hayward didn't have a lot of disposable income and had to use money she'd been given as Christmas gifts and savings from part-time work to pay the bill.

Although the experience hadn't put her off buying online, she was more careful about her purchases now and said other people should make sure they understood the rules around duty and GST charges before clicking "buy".

E-consumers can use the What's My Duty tool on the Customs' website to calculate how much duty and GST they'll have to pay for their online shopping before making purchases.

Other costs that can crop up when shopping using international websites which Kiwis should watch out for include currency conversion and shipping charges.

How to shop smart online

• Use Customs' "What's My Duty" calculator before you order anything from overseas to work out how much GST and duty you'll need to pay and won't have any surprises. If it's less than $60 the charges are likely to be waived
• Check the website you are buying from for shipping charges to New Zealand before you order
• Use an up-to-date exchange rate calculator if the goods are advertised in another currency
• If you're paying by credit card on an international website you might be charged a currency conversion fee (even if the product is advertised in New Zealand dollars) of about 3 per cent if the retailer's merchant bank is located in another country. Check with your bank first if you're unsure or contact the website directly
• Do your research before you click "buy" - other sites might have the same or similar products for a better deal or you might be able to buy the item cheaper here
• Shop with large, well-known retailers when you can - these sites often have the best deals because they usually have a high turnover
• Check verified and trusted voucher sites like nzvouchers.com for discount codes before you proceed to the online check out
• Use price comparison websites like Price Spy and Price Me to make sure you're getting the best deal
• Subscribe to "deals" websites like Grab One