Govt raises online sales threshold
GST on sales up to $1000
WELLINGTON: Revenue Minister Stuart Nash has announced plans to grab a bigger slice of the pie on small online purchases made from overseas retailers.
The Government had previosuly signalled the plan to extend GST to online purchases from October next year, but yesterday lifted the value threshold at which sales are captured to $1000 from the $400 initially announced.
The new regime will also require overseas retailers to register and collect GST if total sales to New Zealand consumers exceed $60,000 a year.
Mr Nash said that the steady growth in online shopping from overseas suppliers meant that a significant amount of tax revenue was being lost.
GST contributed about 26% of the total tax take in the past four financial years, while customs duty on goods other than petrol, tobacco and alcohol amounted to about 0.2%.
The wider net is expected to add $66 million to the Crown coffers in the 201920 financial year, rising to $100 million the following year and $112 million in 202122.
The 2018 Budget forecasts project a GST take of $23.01 billion, $24.1 billion and $25.23 billion respectively in those years.
‘‘It’s a matter of fairness, so the sooner we get this in place the better,’’ Mr Nash said of his plans to introduce the new legislation next month.
The new rules are similar to the regime Australia introduced in July.
The EU has also committed to pursuing the same approach.
EY tax partner Paul Smith said the higher threshold was a savvy move by the Government to avoid a consumer backlash, but relied on overseas suppliers complying with the rules.
‘‘If they don’t comply, it could be a disaster from a revenue collection perspective.’’
Local retailers have complained for some time about the uneven playing field, which has forced many firms out of business and others to reduce their physical store network to better compete with their cheaper rivals.
Industry group Retail NZ has been campaigning on this issue for several years.
Public affairs general manager Greg Harford welcomed the confirmation of the new rules.
‘‘While the solution is not perfect, it is a substantive step forward towards delivering a level playing field for New Zealand businesses,’’ he said. — BusinessDesk