Tax experts said the Government was walking a thin line
between the loss of tax from online sales and the
inconvenience or cost of collecting it.
A discussion document
released by Revenue Minister Todd McClay outlined plans
to start collecting tax on online services including
music, movies, e-books, software and online video
content such as Netflix, which would result in GST of
around $40 million a year.
The issue is one that has
been raised by retailers that say they have a
disadvantage to online sellers that did not have to pay
the tax.
However EY GST executive
director Paul Smith said there was still some way to go
to fine tune the proposals.
"It's not great tax policy
because you have the situation where you will be taxed
on an e-book but not on a book from Amazon which is
clearly not good policy," Smith said. "But it is a step
in the right direction and to be fair, the systems for
taxing physical goods are a lot more complex."
The Government was still
in the process of deciding the threshold for registering
for GST.
Australia will be looking
to introduce its proposed GST changes on July 1, 2017.
In comparison New Zealand has said it will look at
introducing legislation later this year and then at
applying it at some point next year, however this may be
pushed out until 2017 in line with Australia.
New Zealand Retailers
Association chief executive Mark Johnston said the
Government should deal with goods at the same time as
services, adding that he would like to see the proposal
implemented a lot sooner than 2016.
Deloitte tax partner Allan
Bullot said the move was a clear signal from the
Government that it was going to look at the overall
online sales system. "They're clearly saying enough is
enough and we're going to have to change these rules to
bring them within the system," Bullot said. "But they
are still trying to take a bit of a measured approach
and trying to have a system that doesn't impose greater
cost to collect than the actual tax that they collect,"
he said.
"It's not surprising that
services looks like it will be hit with GST earlier than
goods because the practicality of how you collect GST on
low-value goods is still a worldwide issue.
"A submission period on
the proposals will close on September 25.
What it means:
• If the changes are
implemented, then GST would be charged on online
services including music, movies, e-books and other
online downloads.
• Any changes won't be
implemented until 2016 at the earliest.
• Proposed changes for
goods have not yet been announced and are likely to come
in after tax on services.
• The submission period
closes on September 25.
Source:
NZHerald, dated 19/08/2015. |