Have the GST changes ‘snuck’ past you? The first time you’ll probably notice them is when you download music and are charged roughly an extra thirty-five cents per song. It’s not only iTunes and Spotify but also Kindle and Netflix. How’s it work? Basically, you now have to pay GST on the online services you previously bought GST-free like movies, music streaming, e-books, overseas images and email through the likes of Microsoft. Thankfully, fashion junkies don’t need to fret (just yet) because you can generally still buy low-value clothing, from overseas websites, without having to pay GST in New Zealand. But (there’s always a but) it’s more complicated for the poor old business owner as you’ll see below:
- If you’re GST registered you’ll automatically be charged GST unless you provide the overseas supplier with your GST registration number and evidence you’re a New Zealand tax resident.
- If in doubt always check the Invoice especially when processing overseas bills in your accounting software and filing GST returns.
For more detail we’ve attached the IRD commentary below along with some practical issues you might be battling within your own business:
Is there GST on Microsoft?
Yes, unless you’ve given them your business GST number.
To be absolutely sure simply check your Microsoft Invoice. Generally, from October 2016 onwards, most Microsoft Invoices show New Zealand GST if you haven’t given them your GST registration number. However, if you have given them your GST number there won’t be any GST. Top marks to Microsoft for being a terrific global citizen!
Is there GST on Shutterstock
Yes, unless you’ve given them your NZBN.
From November 2017 Shutterstock started charging GST unless you enter your business information on the billing section of their website. Oddly, they ask for your New Zealand Business Number (NZBN) rather than your GST registration number!
Is there GST on Dropbox?
Yes, for individual customers
No, for businesses.
Dropbox has done a terrific job of clarifying this as you’ll see below (applies from 1-Oct-16 for users located in NZ):
- Dropbox Pro: If you’re a Dropbox Pro user you will be charged this tax on your next renewal.
- Dropbox Business: If you’re a Dropbox Business customer, you aren’t subject to GST.
Is there GST on Adobe?
Yes, Adobe started charging GST from 1-Oct-16 on monthly plans.
No, if you’ve given Adobe your GST number (business customers).
Is there GST on Google adwords?
No. GST doesn’t currently apply to NZ business customers charged by Google’s Singapore office. However this may change as there’s talk of Google operating a NZ branch soon (announced Feb-18).
Is there GST on facebook advertising?
Previously no GST was charged and it looks like Facebook is continuing with it’s ‘evil ways’. Currently they only issue a meaningless Receipt (not a proper tax invoice), to most NZ customers, which jeopardises your income tax deduction! Email me your invoice if you’d like me to check.
Is there GST on Kobo?
No. There is no New Zealand GST on Kobo. Kobo.com generally includes European VAT at 15% (which isn’t New Zealand GST) and the invoices fail to show a New Zealand GST registration number. Interestingly, registration numbers are provided for Europe and Canada only, in their terms and conditions. I suspect this may well be a software issue and we’ll shortly see their invoices showing NZ GST for non-business customers.
Is there GST on iTunes?
Apple’s paperwork isn’t necessarily going to help you answer this one. The receipts don’t generally mention GST but it varies depending on which branch you’re dealing with (Luxembourg, Ireland, Sydney, New Zealand). Receipts for Apple Pty Ltd (Luxembourg) currently don’t refer to GST at all and their terms ‘helpfully’ contradict this (as GST should apply to non-business customers):
“In the context of your Transactions, where your Home Country is New Zealand, Apple will assume that You (as purchaser of the Transactions) are either not registered for GST under the Good and Services Tax Act 1985, or you are GST registered but you are not purchasing the Transactions in the furtherance of your taxable activity as defined in the Goods and Services Tax Act 1985”.
Is there GST on iStock?
Currently no. The registration number they provide is for Ireland and not New Zealand. (Using Ireland as a tax base often reeks of tax avoidance!)
Is there GST on Shopify subscriptions?
Currently Shopify isn’t charging NZ GST on subscriptions billed by Shopify Inc, Canada.
Is there GST on GoDaddy?
Interestingly there is a 15% tax shown on their invoices but there is no GST registration number so it may be risky to claim at this stage. However, their website strongly suggests the 15% charge is in fact GST 🙂
GST law change for non-resident businesses supplying remote services
From 1 October 2016 if you’re a business that is not resident in New Zealand supplying remote services from outside New Zealand to a customer who is resident in New Zealand, you may be required to register for New Zealand GST, and return GST on these supplies. Services that may require your non-resident business to register for New Zealand GST and charge GST on supplies made to New Zealand resident customers include online gaming, video streaming and music streaming services.
Non-resident businesses that supply remote services, including online services, from outside New Zealand to New Zealand resident customers will be required to register for GST if they meet certain conditions. Note: You may need to register if you had sales to New Zealand consumers of $60,000 (NZD) or greater in the last 12 months, or expect your sales to be more than $60,000 in the next 12 months.
If your customer is a New Zealand resident you won’t need to return GST if you supply services to a New Zealand GST-registered business. To confirm if your customer is a New Zealand resident you’ll need to check you have two non-conflicting pieces of evidence that indicate the recipient of the service is a New Zealand resident. You can use as evidence:
- the person’s billing address
- the internet protocol (IP) address of the device used by the person or another geolocation method
- the person’s bank details, including the account the person uses for payment or the billing address held by the bank
- the mobile country code of the international mobile subscriber identity stored on the subscriber identity module (SIM) card used by the person
- the location of the customer’s fixed land line through which the service is supplied to them
- any other commercially relevant information.
Suppliers should treat New Zealand resident customers as not registered for GST unless the customer states they are GST-registered, or provides their GST registration number or a New Zealand business number.
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Boutique Financial Chartered Accountants & Business Commentators
Copyright © 2016 Boutique Financial Limited Chartered Accountants Auckland All Rights Reserved. This publication must be read in accordance with the attached disclaimer and does not provide an exhaustive statement of tax law.