Are you a non-resident business supplying remote services to NZ resident consumers?
If so, you may be required to be registered for New Zealand GST and charge GST on services provided to NZ resident customers from 1 October 2016.
When do you need to register for GST?
You will need to be registered for GST when:
- your sales exceed NZD $60,000 in the last 12 months or you expect your sales to exceed NZD $60,000 in the next 12 months, and
- your customer is a NZ resident, and
- you are supplying a qualifying remote service
What is a qualifying remote service?
A qualifying remote service is where, at the time of the performance of the service, there is no necessary connection between the physical location of the customer and the place where the services are performed.
For example, services listed below are qualifying remote services:
- supplies to a supplies to digital content such as e-books, movies, TV shows, music and online newspaper subscriptions;
- online supplies of games, apps, software and software maintenance;
- webinars or distance learning courses;
- insurance services;
- gambling services;
- website design or publishing services;
- legal, accounting or consultancy services.
What is not a qualifying remote service?
Services listed below are not qualifying remote service:
- accommodation services
- hairdressing, beauty therapy and physiotherapy
- car rental services
- entry to cinema, theatre performances, sports events and museums
- gym membership
- passenger transport services
- restaurant and catering services
Is your client a resident in NZ?
To identify whether your client is a NZ resident, you will need at least two of the following evidence:
- the customer’s billing address
- the internet protocol (IP) address of the customer’s device or another geolocation method
- details of the bank account the customer uses for payment, or the billing address held by the bank
- mobile country code of the international mobile subscriber identity stored on the SIM card
- where the customer’s fixed land line is supplied
- any other relevant information.
Is your client GST registered in NZ?
If so, then you do not need to charge GST on the supplies you have sold to your customers who are GST registered in NZ. You can however choose to treat the supply as zero-rated (taxed at a zero percent rate). By doing so, you may be able to claim back NZ GST costs incurred in making zero-rated supplies to GST-registered businesses.
If not, then GST is charged to every customer you have sold supplies to unless they have either indicated they’re GST registered or they have provided you with their NZ GST registration number.
Do you need to issue a tax invoice when you supply a remote service?
No, you are not required to give a tax invoice to your NZ customers upon supplying a qualifying remote service, although tax invoices are a standard requirement for NZ registered businesses.
In the case where you have accidently charged GST to a GST registered customer and your customer seeks refund, and if the supply was NZD $1,000 or less, then you can choose to provide a tax invoice instead of a refund. This will allow the customer to claim back GST in their GST return.
Filing your GST returns
From 1 October 2016 to 31 March 2017, you can choose to file either two-monthly or six-monthly GST return.
From 1 April 2017 however, you will be required to file on a quarterly basis, with the quarters ending on 30 June, 30 September, 31 December, and 31 March.
The GST returns will be due on the 28th of the month following the period the GST return is for. If you had no sales in a period, then a ‘nil’ GST return is required.
If you are only paying GST, then from 1 April 2017, you have an option to file a “pay-only” GST return. This return only requires information relevant to returning GST such as supplies made and GST required to be paid.
If however, you are returning and claiming GST, then a full GST return will be required.
If you have any questions about the new GST obligations on remote services, please contact the tax team at RSM New Zealand, we would be pleased to assist.
Australian GST: Compliance savings for non-residents
Australia has been hastening slowly to reduce the GST compliance burden on non-residents, and after 6 years of ‘deliberation’, the measures finally came into effect on 1 October 2016. Broadly, the changes transfer the GST obligations from some non-resident suppliers to the Australian GST-registered recipients (reverse charge provision), whilst other non-residents are removed from the Australian GST system altogether.