Watch This Space – GST on Low Value Goods
Usually in the GST space, it is a case of our trans-Tasman cousins watching what we do and then
following suit. However in an area which in recent times has received much attention, particularly
as a result of ever- increasing groaning from local suppliers that the playing field with overseas
suppliers of low value goods is far from level, Australia has broken the ice first.
From 1st July 2018, and similar to both jurisdictions recently implemented “remote services”
regimes, a new “point of sale” GST charging mechanism will apply to non-border imports of low value
goods (border imports being those goods accompanying passengers/crew of ship or aircraft when they
arrive in Australia – existing
$1,000 customs value threshold will still apply to these goods). Goods imported in a
consignment over
$AUD1,000 will still be subject to the existing border processes of having the customs duty, GST
and clearance fees charged to the importer at the time of entry into Australia.
Non-resident suppliers (including within that definition, operators of electronic distribution
platforms and re-deliverers (goods initially delivered to place outside Australia and then
re-deliverer assists with delivery into Australia)) meeting the AUD$75k GST registration threshold
will need to register for GST, charge GST on sales of low value imported goods and lodge returns
with the ATO. As with the “remote services” regime, a simplified registration and reporting
system will be available for the non-residents, and there will be provisions in the new
legislation to prevent double taxation.
Currently listed on our Governments 2016-17 tax policy work programme, a June 2016 public
statement identified intentions to:
• move to a de minimis defined by the value of the consignment
• potentially make a reduction to the de minimis in future, and
• undertake further work with industry to develop new collection mechanisms.
Since the release of this statement, the NZ Customs Service has continued work to support the
development of a regime to collect GST on low-value imported goods (presently exempt where less
than $60 GST and/or duty payable on the import (the de minimis rule which equates to roughly $400
of value) and the item does not attract both duty and GST – for example clothing and shoes (where charges may be payable where
value of import exceeds approximately $225).
Watch this space therefore as NZ looks to follow Australia’s lead this time, as I feel it’s
only a matter of “when”, not “if”, new taxing rules will be introduced – particularly in an
environment where the growth of on-line sales from international sites continues to increase.
Cash Dividends – When Derived
IR has released a draft QWBA (PUB00296) on the issue of when income from a cash dividend (as
opposed to a non-cash dividend) paid on ordinary shares is derived.
The commentary provided in the QWBA distinguishes between those taxpayers who return income on a
cash basis, and those who use an accrual basis to report income, and also between
dividends paid by listed companies and those paid by closely held companies.
The simple answer for those shareholders who account on a cash basis (usually salary & wage
taxpayers and some professionals) is that the dividend will be taxable to them in the income year
during which the amount is actually paid to them, unless it is credited for their benefit at an
earlier date – for example by way of a journal credit to their shareholder current account.
Those on an accrual basis of accounting, will derive the dividend income when a debt
in their favour is deemed to have been established and it should be noted that this could be,
particularly in the case of closely held company dividends, as early as the date the dividend is
declared (irrespective of when the journal entry to record the dividend is actually processed).
This could occur for example where a director’s resolution declares a dividend payable to
shareholders of the company as at the date of the resolution, payable by way of credit to the
shareholders current account. The debt in favour of the shareholder under this scenario (and
therefore the income derivation trigger) is created at the date of the resolution – the subsequent
entry in the books at a later date simply evidencing the prior decision of the Board.
With respect to dividends paid by listed companies, usually the “record date” will be the
applicable date for shareholders reporting their income on an accrual basis, as it is only on this
date that identification of the shareholders entitled to receive the dividend will be determined.
The deadline for comment on PUB00296 is 22nd December 2017.
New Revenue Minister’s Address to CAANZ
The Honourable Stuart Nash made the opening address of the annual CAANZ tax conference held on
16/17th November.
The speech focused on three key aspects – the 100 day plan, future challenges and
IR’s business transformation project.
With respect to the new Government’s 100 day plan, priorities in the tax space will
see the repeal of National’s planned tax cuts, legislation to pass the Families Package (Winter
Energy Payment, Best Start and Paid Parental Leave increases) and establishment of the Tax Working
Group. The proposed initial question for the TWG to answer, will be “is our tax system fit
for the future?” We should expect to see terms of reference and membership of the TWG
pre-Xmas.
On future challenges, Minister Nash referred to first understanding “what is the future of work?”
and having 21st century solutions to 21st century problems, which can only occur by appreciating new
technology and the way if changes how businesses operate and consumers behave, and what other
disruptive technologies may be on the horizon.
Finally, albeit it briefly (since the Commissioner of IR was next up with her own
update), were some comments re IR’s use of digital services to increase certainty in the tax
system, reduce compliance costs and simplify tax administration. Interesting I thought was the
comment on how as a result of the transformation project, businesses will be able to spend more
time on running their businesses, with tax as a secondary consideration. I would suggest the
majority of SME’s out there will never experience such a feeling, however I may be proved wrong….
Richard Ashby BBus, CA, CPA
PARTNER
Em: [email protected]
Ph: +64 9 365 5532
Fx: +64 9 309 5260
Mb: +64 21 823 464
