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LAWCOMM 403 long notes.docx
LAWCOMM_403_long_notes.docx
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LAWCOMM 403 long notes.docx-CONTENTS Tips ...........
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
Page 154
o
From 1 December 2019, the amendments apply GST to imported goods valued at or below $1,000 that are
imported from offshore suppliers by consumers in New Zealand
They require the offshore supplier to register for and return GST on these supplies provided they
supply more than $60,000 of supplies to New Zealand residents in a 12-month period
Offshore suppliers may have the opon to also charge GST on their supplies of goods over $1,000 to
consumers in New Zealand.
The New Zealand Customs Service (Customs) ceased to collect any form of duty on consignments
valued at $1,000 or less, except for tobacco products or alcoholic beverages. Customs will however
connue to collect GST on imported parcels valued above $1,000.
Offshore suppliers would not be required to return GST on supplies to New Zealand GST-
registered businesses, nor would they be required to provide tax invoices.
Furthermore, as with domesc suppliers and offshore suppliers of remote services, offshore suppliers
are required to register for and return GST when their taxable supplies to New Zealand consumers
exceed $60,000 in a 12-month period.
IMPORTED SERVICES
Secon 8(4B)
provides for the imposion of GST on imported services – this charge arises however only in narrowly
defined circumstances
o
This is called a reverse charge because the purchaser (not the supplier) is the one who has to account for GST
Secon 8(4B) provides that a supply of services made
outside
New Zealand is “treated as being made
in
New Zealand”
if:
o
the services are
supplied by a non-resident to a resident
; and
o
the
supply would have been taxable if made in New Zealand
But, secon 8(4B) is subject to a very large excepon –
it does
not
apply if supplies
made
by the importer are at least
95% taxable
:
ss 8(4B)(b)(i) and (ii) and 21G
(definions of “percentage actual use” and “percentage intended use”)
o
In other words, secon 8(4B) does
not
apply if the importer of the services is a typical New Zealand business
Examples:
o
A New Zealand life insurance company pays $1 million to an offshore computer company for computer
programming services. As life insurance is financial services exempt from GST, the NZ company is not making
any taxable supplies (95% required). Therefore, secon 8(4B) applies and the life insurance company must pay
GST of $150,000.
o
A New Zealand retailer likewise pays $1 million to an offshore computer company for computer programming
services. The retailer makes supplies that are 98% taxable (sales of goods and services) and 2% exempt
(financial services, such as hire purchase). More than 95% of the supplies made by the retailer are taxable; the
retailer is therefore not required to pay GST on the imported services.
CROSS-BORDER SUPPLIES OF REMOTE SERVICES
This provision was introduced on 1 October 2016 and is designed to catch supplies of digital services by non-residents
(e.g. Nelix, games, webinars, legal or accounng services) to residents
8
Imposion of goods and services tax on supply
…
(3)
Despite subsecon (2), goods and services are treated as being supplied in New Zealand if the supplier is a non-resident
and—
…
(c)
the services are remote services supplied to a person resident in New Zealand, other than services that are
physically performed in New Zealand by a person who is in New Zealand at the me the services are performed.
…
(4D)
Despite subsecon (3), if a non-resident supplier supplies remote services to which subsecon (3)(c) would apply but for
this subsecon to a registered person for the purposes of carrying on the registered person’s taxable acvity, the services
are treated as being supplied outside New Zealand …
Such supplies are therefore subject to GST under
secon 8(1)
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