The taxing business of GST returns

The sealed bag system makes it possible for travellers to claim tax back on purchases made in NZ, such as a merino socks, as worn by our friend here. Photo / Supplied

In many countries there's a system which allows departing visitors to claim back the sales tax - or VAT or GST - on goods they've purchased during their trip. But not in New Zealand.

It most likely hasn't been a problem for you, if you live here and read Herald Travel every week, but it may well have been an issue for visiting friends and relatives from overseas.

Auckland International Airport says it is not uncommon for tourists to turn up at the airport's Collection Point, present a receipt from a retailer and ask for a GST refund.

Often they've been told by the retailer that they will be able to get the 12.5 per cent tax back on their way out. And, not unnaturally, they tend to become cross when they find they can't. The unfortunate result is that these tourists tend to leave the country with a sour taste over the loss of an expected refund instead of being still excited about the great time they've had.

To try to stop that happening the airport company and Inland Revenue are trying to raise awareness of what the rules actually are. In fact, Inland Revenue says, all visitors have to pay GST on their purchases just like New Zealand residents and "under our laws you will not be able to get a refund when you depart from the country".

The only way tourists can avoid paying GST is if they export goods without taking possession of them in New Zealand. There are two ways of doing this:

Ask the retailer to mail goods directly to the visitor's overseas address.

Make use of the official "sealed bag" system. This is available from authorised retailers - generally large, tourist-oriented retailers in popular holiday spots like Rotorua and Queenstown - in cases when the purchaser will be leaving the country within five days. Under the system, the retailer puts the goods into a sealed bag which is sent to the airport where it can be collected from Customs by the departing traveller.

Personally I've never bothered to claim back sales tax at the end of any of my trips but that's probably because I've never bought anything expensive enough to make it worth the bother.

But if you've got visitors who plan to spend up large on merino wool fashion or greenstone carvings, for example, it could certainly be worth their while going through the processes of the sealed bag exercise.