| The impending changes to how and when GST and Customs Duty is charged on imported goods is causing some confusion to home educators who order in resources from overseas. This article outlines the changes and what they will mean to families from 1st December 2019 |  |
The situation before 1st December
Until the changes come into effect, the status quo situation applies - when people import items with a total value including shipping that exceeds the threshold, GST and Customs Duty is calculated and charged by NZ Customs before the items are released for delivery. While this is not strictly based on a dollar figure, effectively any imported books etc with a total value including shipping of NZ$400 or more will incur charges. Actual charges can be calculated HERE. (In actual fact GST and duty if applicable is calculated on all imports, but only charged if it exceeds $60 on a given shipment, and then Custom's entry fees are added).
Offshore suppliers are not required to collect GST on sold items.
Until the changes come into effect, the status quo situation applies - when people import items with a total value including shipping that exceeds the threshold, GST and Customs Duty is calculated and charged by NZ Customs before the items are released for delivery. While this is not strictly based on a dollar figure, effectively any imported books etc with a total value including shipping of NZ$400 or more will incur charges. Actual charges can be calculated HERE. (In actual fact GST and duty if applicable is calculated on all imports, but only charged if it exceeds $60 on a given shipment, and then Custom's entry fees are added).
Offshore suppliers are not required to collect GST on sold items.
As of 1st December 2019
The main points to know about:
*Note! The decision about whether GST is payable on a consignment is made on the value of the consignment itself, exclusive of shipping/packaging/insurance costs. HOWEVER, if it IS payable, then the actual charges are calculated on the total including postage, packaging and insurance (if applicable). This means that overseas suppliers who are required to collect GST will do so on all shipments up to $1000NZ in value, but charge GST on the total including shipping etc. Customs will charge GST etc on all shipments valued at over NZ$1000 not including shipping, but GST is also charged on the cost of shipping.
Example 1: Jill orders $900NZ worth of books from a small company in the U.S, who are not required to register for GST. They therefore don't charge GST. Shipping comes to $125NZ. When the package arrives in NZ, Customs examine the shipping invoice. They see the total value of the items was $900, and therefore do not charge GST, even though with shipping the total would be $1025.
Example 2: John orders $1100NZ worth of books from a company with less than $60K sales to NZ per year. He pays $1100 plus $150 shipping to the company. Customs see that the total is over $1000, so they charge GST on $1100+$150 = $1250, and also add the entry fee of $55.71.
Example 3: Kirsty orders $300NZ worth of books from Amazon, with shipping costs of $65NZ. Amazon is registered for GST in NZ. They charge her GST on the cost of the order plus shipping ($365), which they then pay to IRD along with other collected GST on sales.
Example 4: Mark orders from a smaller supplier in the U.S. His shipment includes $300NZ of books, $500NZ of Lego, plastic math manipulatives etc, and $250 in flashcards and educational games, for a total of $1050NZ plus $150 shipping. At the border he would have to pay:
GST= $1200x15%=$180
Duty on $750 of toys @5%=$37.50
Entry fee: $55.71
Total: $273.21
Example 5: Liz orders $100NZ in books and $50NZ worth of "toys" from Amazon. Shipping is $30. She will pay GST on $180 = $27 via Amazon. Amazon (and other overseas suppliers) will not be charging duties on applicable items.
Example 6: Lisa orders books totalling NZ$950 from Awesome Book Company, who are registered for GST. Shipping costs $100NZ. Awesome Book Company would charge Lisa GST on items plus shipping ($1050).
For full details on the rules and how they work, see: GST on low-value imported goods – a special report (August 2019) (ird.govt.nz)
The main points to know about:
- Overseas suppliers who have sales to NZ customers totallying $60,000 NZD or more per year will be required to register for GST, charge and collect GST on sold items, and pay that GST to IRD on all sales of NZ$1000 or less*. If you order from one of these suppliers, then you will pay GST on your purchase no matter the size of the order (via the supplier if valued at $1000 or less, and to Customs if over that value).
- NZ Customs will now only charge GST and entry fees on shipments totalling more than $1000* at the border.
- If there is evidence that the GST has already been collected by the off-shore supplier on all items in larger shipments, they will not add more GST at the border (but may add it on items which have not been charged for).
- Overseas suppliers who have sales to NZ customers under $60K per year will not be required to register for GST, and should not therefore charge GST on sales. If you order from one of these suppliers, and your total shipment is equal to or less than $1000* NZ, then you will not pay GST, duty or entry fees on those items.
- Redeliverers, such as NZ Post's YouShop, will be required to charge and collect GST on all items they deliver, irrespective of amount or whether the source company is GST registered. This is because the new legislation requires that goods delivered by a GST-registered redeliverer be treated as if those goods were supplied by the redeliverer. In other words, for example, NZ Post is GST registered in NZ; they must charge GST on the value of items (including shipping) which they collect, ship and deliver to NZ recipients, as well as GST on the cost of their services.
- If multiple shipments arrive for the same recipient in a short period of time, Customs may combine the totals and treat them as one consignment. (This is unchanged)
- These rules also apply to second hand books and resources.
- Non-book items may have additional duty tariffs applicable (eg 5% for toys); if ordering these kinds of items, they will change the way the payable amounts are calculated and charged for shipments over $1000.
*Note! The decision about whether GST is payable on a consignment is made on the value of the consignment itself, exclusive of shipping/packaging/insurance costs. HOWEVER, if it IS payable, then the actual charges are calculated on the total including postage, packaging and insurance (if applicable). This means that overseas suppliers who are required to collect GST will do so on all shipments up to $1000NZ in value, but charge GST on the total including shipping etc. Customs will charge GST etc on all shipments valued at over NZ$1000 not including shipping, but GST is also charged on the cost of shipping.
Example 1: Jill orders $900NZ worth of books from a small company in the U.S, who are not required to register for GST. They therefore don't charge GST. Shipping comes to $125NZ. When the package arrives in NZ, Customs examine the shipping invoice. They see the total value of the items was $900, and therefore do not charge GST, even though with shipping the total would be $1025.
Example 2: John orders $1100NZ worth of books from a company with less than $60K sales to NZ per year. He pays $1100 plus $150 shipping to the company. Customs see that the total is over $1000, so they charge GST on $1100+$150 = $1250, and also add the entry fee of $55.71.
Example 3: Kirsty orders $300NZ worth of books from Amazon, with shipping costs of $65NZ. Amazon is registered for GST in NZ. They charge her GST on the cost of the order plus shipping ($365), which they then pay to IRD along with other collected GST on sales.
Example 4: Mark orders from a smaller supplier in the U.S. His shipment includes $300NZ of books, $500NZ of Lego, plastic math manipulatives etc, and $250 in flashcards and educational games, for a total of $1050NZ plus $150 shipping. At the border he would have to pay:
GST= $1200x15%=$180
Duty on $750 of toys @5%=$37.50
Entry fee: $55.71
Total: $273.21
Example 5: Liz orders $100NZ in books and $50NZ worth of "toys" from Amazon. Shipping is $30. She will pay GST on $180 = $27 via Amazon. Amazon (and other overseas suppliers) will not be charging duties on applicable items.
Example 6: Lisa orders books totalling NZ$950 from Awesome Book Company, who are registered for GST. Shipping costs $100NZ. Awesome Book Company would charge Lisa GST on items plus shipping ($1050).
For full details on the rules and how they work, see: GST on low-value imported goods – a special report (August 2019) (ird.govt.nz)
In Summary:
- If you are ordering smaller shipments of resources (NZ$1000 or under excluding shipping etc) from a smaller overseas supplier and not using a redeliverer (drop shipping address), then you won't be charged GST or entry fees (that's a win :-) )
- If you are ordering from an overseas supplier with a turnover to NZ over $60K, then you will be charged GST no matter the size of your order.
- However, for shipments totalling $1000 or less, as it's being charged by the overseas supplier , then you will not have to pay Customs entry fees (or duty if applicable) (a partial win)
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