13 Nov 2012

Duty-free online buying erodes tax revenue

6:57 am on 13 November 2012

An accountant specialising in goods and service tax says the loss of tax revenue from offshore purchases made online is a concern for the Government.

Most goods below $400 which are brought into the country by post or courier don't get charged GST or excise duty, although some items like clothing are subject to tariff payments.

Iain Blakeley, the head of Ernst and Young's indirect tax team, responsible for GST and Customs, says the loss in revenue from offshore sales is a difficult thing to assess.

"The amount of GST and duty lost as a consequence of the low-value threshold that we have that allows items to come in duty-free ... costs the Government below $10 million a year," he says.

But this cost would rise as more New Zealanders bought goods and services from overseas online.

Mr Blakeley says some customs officials are concerned about abuse of the $400 threshold.

In some cases people were misrepresenting the value of the goods, or else having vendors re-label some of the purchase cost as freight charges so that an item could slip under the threshold.