Guide to New Zealand GST for ecommerce stores

One great thing about ecommerce is the ability to sell to anyone the world over. However you might be confused as to when you should charge GST and when you shouldn’t. Recently the New Zealand government has cracked down on GST collection for ecommerce stores. This short guide will help set things straight.

Are you registered for GST?

If your business turnover is greater than $60,000 NZD then you have to be GST registered.
If you charge GST then you must be GST registered.

You can get away with not registering for GST if you don’t fall into the above categories. However you won’t be able to claim back GST on your business expenses.

You can register for GST through the IRD website.

Zero Rated Goods and services.

Zero rated goods and services are goods or services that are supplied by a GST registered New Zealand person and shipped or performed outside of New Zealand. So anything you ship to an overseas customer is Zero Rated and you don’t have to collect GST on it.

Physical Goods

If your ecommerce store is based in New Zealand and selling physical goods then you will have two scenarios:

1.  IF
   you are a GST-registered person sells goods over the internet and the goods are physically supplied to a customer in New Zealand.THEN
   GST is chargeable at 15%
2.  IF
   you sell goods online ship them to customers overseasTHEN
   The sale can be zero-rated. You don’t have to charge GST.

If you aren’t collecting GST on your product then you will need evidence of this in case you are audited. An overseas delivery address will be fine.

If you are selling a digital product then again, you have two scenarios:

1.  IF
   you are a GST-registered person sells digital products over the internet and the goods are supplied to a customer in New Zealand.THEN
   GST is chargeable at 15%. The goods are treated as a service for GST purposes.
2.  IF
   you sell digital products online to an overseas customer.THEN
   The sale can be zero-rated. You don’t have to charge GST.

If you aren’t collecting GST on your digital product then you need to prove the product was ‘exported’. An Overseas credit card used to purchase and and overseas emails address can be used as evidence. But the best way is to get the customers name and address and get them to declare: “I declare that I am not in New Zealand at this time and will not be making use of this supply in New Zealand”

You could have a checkbox in your checkout form that they can tick. Or you could include it in your terms and conditions and have a checkbox declaring that “I have read and agree to the terms and conditions”.

In WooCommerce you can make customers agree to your store’s T’s & C’s before they pay for the product.

How do I apply this to my ecommerce store?

Most good ecommerce platforms have the ability to apply sales tax based on the address of the customers. So you could set it up to charge GST for New Zealand based addresses but not for overseas addresses.

If your ecommerce platform can’t do this then the easiest way is to charge an extra 15% for everyone.

When you come to do your GST return just remember which sales were zero rated (sold to overseas customers) and which you need to pay GST on. You don’t want to overpay your GST. Although I’m sure the IRD will graciously accept your donations.

DISCLAIMER: I am not a tax expert or an accountant. This is just a quick guide to NZ GST and ecommerce. If you want solid advice then talk to a chartered accountant.