Australian tax office coming for Kiwi retailers

Retail NZ has renewed its call for New Zealand to make foreign retailers pay GST. Photo / Getty Images

Retail NZ is urging Kiwi retailers to register to pay Australian GST and again urging the Government to follow suit by making foreign websites pay their fair share of tax.

The Australian Tax Office has been holding seminars in New Zealand this week to brief local retailers on the new tax requirements which will take effect from 1 July.

Australia has updated its GST legislation on low-value goods, meaning Kiwi businesses will soon be required to charge 10 per cent GST, effective from July this year, if they have sales of more than A$75,000 ($83,000) a year to consumers.

Currently, imported physical goods under A$1000 are not subject to GST.

Greg Harford, general manager of public affairs for Retail NZ, acknowledged New Zealand online retailers did substantial business in Australia but was concerned Australia was giving Kiwis yet another disadvantage.

"Retail NZ accepts Australia's right to tax foreign firms on the same basis as Australian firms, but we are deeply concerned that the New Zealand Government has so far failed to follow suit," Harford said.

"Retailers in New Zealand have long suffered a competitive disadvantage as a result of Government tax policy, but the ultimate indignity is now that New Zealand retailers selling into Australia need to pay Australian GST to the Canberra Government, while Australian retailers are effectively given a tax-free pass by our Government when selling into New Zealand.

"It's another example of action by Australia to disadvantage Kiwis that's not being reciprocated by the New Zealand Government."

Deloitte tax partner Allan Bullot said Australia's new legislation could be a challenge for small retailers, who will now need to advertise payable GST.

"If you're a New Zealand retailer, supplier or manufacturer, selling directly to end consumers in the Australian market, and you sell more than A$75,000 of sales into Australia in any 12-month period and any of those goods which are less than A$1000, you will have to charge Australian GST when you make that sale," Bullot said.

"Even though you have no physical presence in Australia you will have an obligation to return Australian GST at 10 per cent ... and you want to be charging that 10 per cent GST when you're making the sale."

Retail NZ, lobby groups and New Zealand retailers have long been calling for the Government to update its current tax legislation.

The Business Herald approached revenue minister Stuart Nash in February about the matter who said new GST legislation on imports was off the table this year.

"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 at the time.

The Government's Tax Working Group was examining the matter but getting such GST legislation changed was a lengthy process, 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 estimates the Government is missing out on $235 million of GST per year, or $5.8 billion, over the next 10 years.