GST threshold for online purchases progresses

On 30 June 2016, the Minister of Customs, the Hon Nicky Wagner, announced that the Government wants to lower the threshold on online purchases that qualify for GST from mid-2018 but said that Customs needs to look into more detail around what some of the collection mechanism options could look like and what the border transaction fees might be.
International obligations require the setting of a threshold, known internationally as the de minimis, at which duties are payable on imported goods. New Zealand currently collects duty (GST and tariff duty) where $60 or more of duty applies. This equates to a consignment value that varies between $226 and $400 according to whether tariffs are payable, and when freight and insurance costs are not considered. The level of de minimis in New Zealand is set by regulation and public consultation is required if those regulations are to be changed.
The volume of low value goods imports has grown by about 14% per annum and is expected to double over the next five years, especially with the rise of online shopping.
Customs has been exploring whether it is possible to change the shape and level of the de minimis and over the last six months, has consulted with key industry and partner agencies. It will continue to carry out further work to develop its proposals.
Following an update to Cabinet on Monday 27 June 2016, the Government agreed to issue a public statement identifying intentions to:
• move to a de minimis defined by the value of the consignment
• potentially make a reduction to the de minimis in the future, and
• undertake further work with industry to develop new collection mechanisms.
The Minister noted that by lowering the threshold too soon, there was a risk that goods would be held up at the border needlessly and that collection costs would exceed revenue gained.
The Minister said that no changes would be made without public consultation and that everyone will have an opportunity to get the full picture and make submissions at that stage.
References:
Marilyn Hay, Consultant Editor
Source: www.beehive.govt.nz and www.customs.govt.nz.