There will not be new GST legislation for goods under $400 this year. Photo / 123RF
There will not be new GST legislation for goods under $400 this year. Photo / 123RF
New legislation to expand GST to include all imports is off the table for this year, says Revenue Minister Stuart Nash.
Lobby groups and retailers have been pushing for the Government to implement new legislation on par with Australia's incoming legislation that will be in force from July, but Nash says the Government would not be updating equivalent legislation anytime soon.
In New Zealand, the Customs Service screens incoming parcels to make sure the right amount of tax is paid on imported goods. Charges of less than $60 in GST and duty are waived, which depending on the items being imported could equate to a purchase of goods worth hundreds of dollars.
The current loophole effectively means that the Government is handing a significant price advantage to foreign businesses.
"We won't have it by July this year, that there's no doubt [about], but we will be watching Australia very closely," Nash said.
"Our GST system is a lot simpler than the Australian GST system. We have a flat rate, very easy. We know that GST can be collected by companies overseas, we have the Netflix tax ... we will be watching what happens with Australia ... and I'm assuming that the tax working group will also be keeping a close eye on what happens over there."
Australia has updated its GST legislation on low-value imported goods, meaning Kiwi businesses will be required to charge 10 per cent GST, effective from July next year, if they have sales of more than A$75,000 ($83,000) a year to consumers there.
Currently, imported physical goods to Australia under A$1000 are not subject to GST.
The issue is being examined here by the Government's Tax Working Group.
Nash said he was unsure if Australia implementing a tax on low-value imported goods would influence recommendations here.
"Tax legislation by its very nature is reasonably complex. You'd think tax would be pretty easy, change a number here, change a number there but it is complex and it has to be," he said. "We need to make sure our tax system is robust and most importantly that it's fair."
Revenue Minister Stuart Nash says the Government will be watching moves in Australia closely. Picture / NZME
The government routinely watched its Australian counterpart and Inland Revenue worked closely with the Australian Tax Department, he said.
The process of getting such GST legislation changed was a lengthy one, he said.
"I'm certainly not in favour of rushing tax legislation because that's when you end up with something that really is sub-optimal and doesn't benefit the country."
Nash could not confirm whether new legislation would be implemented next year.
Retail NZ general manager of public affairs Greg Harford was pleased the matter was being considered by the Government but said it needed to be dealt with urgently.
"From a retailer's point of view, action is increasingly urgent. The current loophole effectively means that the Government is handing a significant price advantage to foreign businesses, and discriminating against Kiwi firms that are based here and employ New Zealanders," Harford said.
"The small scale of the New Zealand market means that domestic retailers already have to work extra-hard to compete in the global 24/7 shopping environment, and the fact that the Government effectively subsidises their foreign competitors makes it even harder."
Retail NZ estimates that the Government will raise $5.8 million over the next 10 years if it changes legislation on low-value goods.
Harford said there was no reason for the Government to delay announcing a date for a change in the legislation.
"It's just not right that some of the world's biggest companies are able to sell into New Zealand without paying their share of tax to the New Zealand Government."
