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Inland Revenue

Tax Policy

PUBLISHED 10 May 2016

RLWT, and GST on online services tax bill passes third reading

The Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill passed its third reading today. The bill now awaits Royal assent. For more information see the media statement.

Hon Michael Woodhouse
Minister of Revenue

10 May 2016

Media statement

GST on online purchases Bill passes 3rd reading

Cross-border purchases by New Zealand residents of services and other intangibles such as music bought through offshore providers will be subject to GST from 1 October 2016, following the passing of the Taxation (Residential Land Withholding Tax, GST on Online Services and Student Loans) Bill in Parliament today, Revenue Minister Michael Woodhouse says.

“Collecting GST from the growing volume of online sales across borders has been an issue of growing concern for some time, so the passing of this legislation marks a very important first step,” Mr Woodhouse says.

“Currently New Zealand providers are at an unfair disadvantage because they must apply GST to their services, whereas overseas providers do not. This creates an unfair playing field which this legislation will eliminate.”

Other measures in the Bill passed today include the introduction of a residential land withholding tax and an information exchange of student loan borrower details with Australia.

“These measures are also about ensuring fairness across our tax system,” Mr Woodhouse says.

“If a property has been bought and sold with the intention of making a gain, those gains have always been taxable. But it can be difficult for Inland Revenue to collect tax from the proceeds of such sales from foreign owners with no, or limited, presence in New Zealand.

“That’s why the residential land withholding tax builds on the new bright-line test and is aimed specifically at offshore vendors. This will be collected from the offshore seller at the point of sale and becomes payable from 1 July 2016.

“This change will help ensure that the lawful amount of tax that should be paid is collected.”

The third major measure passed today will help Inland Revenue stay in contact with student loan borrowers in Australia, which helps ensure that people continue to fulfil their loan obligations.

“The new measure enables an information exchange with Australia, providing Inland Revenue with the contact details of borrowers living in Australia,” Mr Woodhouse says.

“Most loan borrowers do the right thing and make repayments on time – this change will just help to ensure a higher level of compliance from borrowers living in Australia.