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GST levied by New Zealand Customs Service

By April 22, 2022 No Comments

GST levied by New Zealand Customs Service

Inland Revenue (IR) has issued three draft commentaries recently, relating to GST levied by New Zealand Customs upon goods imported into New Zealand.

The first two are Questions We’ve Been Asked (QWBA’s) and the third is a public ruling.

PUB00439 is a draft QWBA, which poses the question:

Can a customs broker treat GST that is paid to New Zealand Customs on behalf of their importer clients as part of their taxable activity when accounting for GST?

IR’s present view (subject to your submissions) is no, and this is because the GST paid relates to the importer’s taxable activity, not the customs broker’s taxable activity – the customs broker not acquiring the imported goods for use in their own taxable activity. Additionally, the customs broker cannot issue any documentation (for example a tax invoice) claiming to charge GST when they ask the importer to reimburse them for the GST they have paid to New Zealand Customs. This is because the request for reimbursement is not a request for payment for a taxable supply the customs broker has made.

PUB00440 is also a draft QWBA, which poses the question:

Can an importer who overpays GST to New Zealand Customs claim an input tax deduction for the whole of the GST paid?

In this instance, IR’s present view is yes, a GST input tax claim for the full amount can be claimed. This is because New Zealand Customs is not allowed to refund overpaid GST where the importer is a registered person who can claim an input tax deduction. Therefore, for an importer that is a registered person to get a refund of overpaid GST, the proper mechanism to use is to claim an input tax deduction for the whole of the GST they paid to New Zealand Customs.

Finally, draft public ruling PUB00438 outlines when invoice-based importers can claim an input tax deduction on GST levied by New Zealand Customs, and it also explains what documentation importers can use to support their claim for an input tax deduction.

The Ruling is proposed to apply to input tax deductions for GST collected by New Zealand Customs on goods imported into New Zealand on and following 1 July 2022, for an indefinite period.

It’s a fairly simplistic commentary I must say, in comparison to the usual detailed technical analysis most Rulings contain, commencing with a brief reminder that those registered on an invoice basis can claim an input tax deduction when an invoice is issued to them or when payment is made, whichever is earlier, and then focusing directly on point in relation to the four types of documents issued by New Zealand Customs that will be considered an ‘invoice’:

  • An electronic import entry once the entry has been passed;
  • A Deferred Payment Statement issued to an importer;
  • A cash statement; or,
  • A manual invoice/statement.

You are also reminded that to be an ‘invoice’, the document must include details of the imported goods, and as both a Deferred Payment Statement and a cash statement do not contain such details, you will also need to keep the import entries or other records showing details of the imported goods to support your input tax claim.

Submissions on all three drafts are requested to be made no later than 10th May 2022.

This article from the ‘A Week in Review’ newsletter was originally published Tuesday 19th February 2022. If you have any questions or would like a second opinion on any national or international tax issues, please contact me richard@gilshep.co.nz. 

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