National’s Amazon Tax Proposal

Foreign firms that sold more than $60,000 worth of goods to New Zealanders each year would need to levy GST on items worth $1000 or less.

No import duties or Customs/ biosecurity fees would be payable on those items.

If someone bought an item worth more than $1000 from overseas, they would remain responsible for paying GST, any duties and a Customs/biosecurity fee, themselves.

The Cabinet paper said the new rules could come in on October 1, 2019, and would be ‘‘consistent’’ with Australia’s planned Amazon tax, which is due to take effect this July.

If someone bought a T-shirt costing $50 from overseas they could expect to pay $57.50 – $7.50 more than today – because of the addition of GST.

If they bought a pair of shoes costing $300, they would pay a total of $345 for their purchase. How it works now

Items that would attract less than $60 in GST and import duty can be bought from overseas tax-free.

New Zealand has abolished most duties, so most items costing less than $400 (including shipping) can be bought online from overseas untaxed.

But a lower threshold applies to some popular items that still attract import duties. The tax-free threshold for shoes and clothes, for example, is $226, because they attract duty at the rate of 10 per cent.

It may not always be clear from suppliers’ Customs declarations what items really cost, so the collection of these taxes and fees can be somewhat ‘‘hit and miss’’.

But if purchases are above the tax-free threshold and are caught by Customs, consumers will not only pay GST and any duty, but also a combined Customs and biosecurity fee of $49.24 – which can make just-crossing the tax-free threshold an expensive gamble.

If people buy a T-shirt costing $50 from an overseas website, that is the total price they will pay.

But if they buy a pair of shoes costing $300, they should pay $428.74 – once GST, 10 per cent duty and the Customs and biosecurity fees are added.