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The Government has asserted a Taxation Bill on 13th May 2015. Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans is effective from 01 October 2016. The bill covers many amendments in Student Loan Scheme Act 2011, the Income Tax Act 2007, the Goods and Services Tax Act 1985, and Tax Administration Act 1994. This article covers information about amendments in Goods and Services Act (GST) 1985.


Major amendment is non-resident businesses (offshore suppliers) who are supplying goods and services to New Zealand resident consumers, required to register and file GST returns on these supplies. It includes digital services such as internet downloads and online services, software purchased from offshore websites, and more traditional services such as legal and accounting services that are supplied remotely regardless of border. The amendments also include rules for insurance and gambling services that are supplied remotely by offshore suppliers.
The bill is passed with a viewpoint of reducing costs for compliance and calculations in many areas such as marketplace rules, gambling services, and zero-rating of business-to-business supplies.
The bill also gives relief to offshore suppliers on currency conversions and calculating their taxable activities for taxable period. Furthermore, it sets out rules on determining residence and status of remote service recipients for offshore suppliers.


The change in law:

A new section will be inserted in the GST Act, section 8B setting out how an offshore supplier would determine whether a recipient of remote services is resident in New Zealand and should therefore be charged GST.

Non-resident businesses (also called offshore suppliers) are those who are not New Zealand residents for GST purposes.

Non-resident businesses that are supplying goods and services (supplies) to customers residing in New Zealand will be required to charge and file GST return on those supplies.

If you are a non-resident business and supply services (supplies) from outside New Zealand to customer resident in New Zealand then your business may be required to register and file return for GST on supplies. This is affecting online services and online software such as:

Example 1: Netflix supplies TV network to New Zealand customers. Netflix will have to register and file GST returns from 1 October 2016.

Example 2: Always Fresh Ltd has a business of supplying fresh fruits and vegetables to New Zealand retailers. They are non-resident business. Always Fresh Ltd has to register for GST and they have to comply with all GST requirements set out in GST ACT 1985.


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