GST changes

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Title: Marketplace rules for listed services

Sub-title: Overview

From 1 April 2024, GST-registered online marketplace operators facilitating the sale of ‘listed services’ must collect and return GST of 15% when the service is performed, provided, or received in New Zealand.

An online marketplace is an electronic platform through which sellers can supply goods and services to customers.

The rules also introduce:

• Flat-rate credit scheme for sellers not registered for GST
• Opt-out rules for large sellers who meet certain criteria.

Narrator

From 1 April 2024, GST registered online marketplace operators facilitating the sale of ‘listed services’ must collect and return GST of 15% when the service is performed, provided, or received in New Zealand. This will apply whether the seller is GST-registered or not.

An online marketplace is an electronic platform (like a website, app or internet portal) through which sellers can supply goods and services to customers. They are sometimes known as digital platforms.

This applies to both NZ-based and offshore online marketplaces.

The rules will also introduce:

• Flat-rate credit scheme for sellers not registered for GST
• Opt-out rules for large sellers who meet certain criteria.

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Title: Marketplace rules for listed services

Sub-title: What are listed services?

Listed services are:

• ride sharing and ride-hailing
• delivery of food and/or beverages
• short-stay and visitor accommodation.

Accommodation used by the customer as their principal place of residence is exempt.

GST also applies to closely connected services if they’re facilitated through the marketplace operator.

Narrator

Listed services are:

• ride sharing and ride-hailing,
• delivery of food and/or beverages,
• taxable accommodation. Common examples include short-stay and visitor accommodation. Accommodation used by the customer as their principal place of residence is exempt.

When we’re talking about sellers for these changes, we’re talking about drivers, deliverers and accommodation hosts.

GST also applies to closely connected services if they’re facilitated through the marketplace operator. For example, holiday rental cleaning fees charged on top of the accommodation costs.

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Title: Flat-rate credit scheme

Sub-title: For non-GST-registered sellers

Image: Two people with suitcases looking at a bag

Narrator

As part of the marketplace rules, from 1 April 2024, a new flat-rate credit scheme will apply for sellers who are not GST-registered.

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Title: Flat-rate credit scheme

Sub-title: For non-GST-registered sellers

From 1 April 2024, a new flat-rate credit scheme will apply for sellers who are not GST-registered.

Marketplace operators will collect GST at the standard 15% rate.

They will pass on 8.5% to sellers who are not GST-registered. The remaining 6.5% will be paid to us.

The 8.5% passed on to unregistered seller is intended to recognise the GST on their costs from supplying listed services.

These are excluded income for income tax purposes.

Narrator

Marketplace operators will collect GST at the standard 15% rate on listed services that are performed, provided, or received in New Zealand. They will then pass on 8.5% to sellers who are not GST-registered. The remaining 6.5% will be paid to us. We will cover this in more detail later in the presentation. The 8.5% passed on to unregistered sellers is for them to keep and recognises the GST on the costs they incur from supplying listed services.

Unregistered sellers can voluntarily register for GST if they do not want the flat-rate credit scheme to apply to them, but then they will need to meet all the normal obligations that go along with being GST registered including filing returns and claiming back GST based on actual expenses. The flat-rate credit scheme is designed to remove this need and to reduce compliance costs for small sellers who are below the GST registration threshold.

Marketplace operators must inform sellers of the total amount of flat-rate credit they’ve passed on to them. They must inform them at least once a month.

Non-GST-registered sellers do not need to include any flat-rate credits they receive as income in their income tax return. Flat-rate credits are excluded income for income tax purposes.

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Title: Flat-rate credit scheme

Sub-title: Using the new rules

Sellers must provide marketplace operators with their name, IRD number and GST registration status

Marketplace operators must identify sellers that are GST-registered from those who are not.

Marketplace operators can contact us to verify the GST registration status of a seller. They need to email [email protected]

Narrator

To use the new rules, marketplace operators must identify sellers that are GST-registered from those who are not.

To help with this, sellers must provide their marketplace operator with their name, IRD number and GST registration status. Sellers also need to tell their marketplace operator if their GST status changes.

The requirement for drivers, deliverers and accommodation hosts to register for GST when they meet the $60,000 threshold is not changing. They will need to register under the ordinary rules, as they do now.

Marketplace operators can contact Inland Revenue to verify the GST registration status provided to them by a seller by emailing us at [email protected]

I will now hand you over to Patrick.

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Title: GST-registered sellers

Image: Two people sitting on a couch looking at a credit card and a phone

Narrator

Thanks, Rian.

Now let’s have a look at the obligations for GST-registered sellers

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Title: GST-registered sellers

Sub-title: Completing GST returns

GST-registered sellers will need to include the supply of listed services sold through an online marketplace as a zero-rated supply in their GST return.

They will still be able to claim GST on their costs of making supplies of listed services.

If a GST-registered seller is providing services that are not facilitated through an online marketplace, the ordinary GST rules apply.

Narrator

GST-registered sellers will need to include the supply of listed services sold through an online marketplace as a zero-rated supply in their GST return.

They will still be able to claim GST on their costs of making supplies of listed services.

If a GST-registered seller is providing services that are not facilitated through an online marketplace, the ordinary GST rules apply, and they will have to collect and pay GST.

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Title: GST-registered sellers

Sub-title: Returning flat-rate credits

The flat-rate credit scheme cannot apply to sellers who are GST registered.

They will need to make a debit adjustment in their GST return for any flat-rate credits received and tell their marketplace operator they are GST registered.

If a GST-registered seller continues to receive flat-rate credits incorrectly, penalties may apply to them.

Narrator

The flat-rate credit scheme cannot apply to sellers who are GST registered.

If a GST-registered seller receives a flat-rate credit, they will need to return it to Inland Revenue by making a debit adjustment in their GST return. They must also tell their marketplace operator that they are GST registered.

If a GST-registered seller continues to receive flat-rate credits incorrectly, penalties may apply to them.

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Title: GST-registered sellers

Sub-title: Opt-out rules for large accommodation hosts

Some GST-registered accommodation hosts can choose to opt out of the marketplace GST rules and carry on being responsible for their GST obligations.

To opt-out one of the following must apply:

• make more than $500,000 of supplies in a 12-month period and be a non-individual
• meet a 2,000-night threshold based on the number of nights of accommodation listed through a single online marketplace.

Those making more than $500,000 of supplies can notify their marketplace operator that they are opting out.

Those who do not make more than $500,000 but meet the 2,000-night threshold, must enter into an agreement with their marketplace operator to opt out of the rules

Narrator

Some GST-registered accommodation hosts can choose to opt out of the marketplace GST rules and carry on being responsible for the GST obligations. Accommodation hosts who meet the criteria, can opt-out now before the rules apply from 1 April 2024.

To opt-out one of the following must apply:

• make more than $500,000 of supplies in a 12-month period and be a non-individual, or
• meet a 2,000-night threshold. This is based on the number of nights of accommodation listed through a single online marketplace.

Accommodation hosts who make more than $500,000 of supplies in a 12-month period, can tell their marketplace operator that they’re opting out.

Accommodations hosts who do not make more than $500,000 but meet the 2,000-night threshold, must enter into an agreement with their marketplace operator to opt out of the rules. 

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Title: Online marketplaces

Image: A person sitting in a car holding a phone

Narrator

Online marketplace operators will also have some additional obligations.

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Title: Online marketplaces

Sub-title: Completing GST returns

GST-registered marketplace operators will need to include the total sales of listed services (including 15% GST) as sales and income on their GST return.

A credit adjustment will be claimed for flat-rate credits passed on to non-GST-registered sellers.

Narrator

GST-registered marketplace operators will need to include the total sales of listed services (including 15% GST) as sales and income on their GST return.

They will be able to claim a credit adjustment for flat-rate credits passed on to non-GST-registered sellers.

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Title: Online marketplaces

Sub-title: GST registration

Must register for GST if their total sales (including listed services) are more than, or are expected, to be more than, NZ$60,000 in a 12-month period.

When determining if they meet the NZ$60,000 registration threshold, they need to consider all their taxable activities.

NZ-based online marketplaces can register for GST in myIR.

Offshore online marketplaces can use our online GST registration process for non-residents. This is being updated to include listed services.

Registration services will be available from mid-March 2024.

Narrator

Non-GST registered marketplace operators will need to register for and return GST if their total sales (including listed services) are more than or are expected to be more than, NZ$60,000 in a 12-month period.

When determining if they meet the NZ$60,000 registration threshold, they need to consider the supply of listed services facilitated through their marketplace and any other activities, for example the supply of remote services (such as facilitation services for connecting sellers and buyers).

Non-resident marketplaces can use a fair and reasonable method to convert foreign currency amounts to New Zealand dollars to determine if the GST registration threshold has been exceeded.

NZ-based online marketplaces can register for GST in myIR. Offshore online marketplaces can use our online GST registration process for non-residents. This is being updated and listed services will be added and available from mid-March 2024.

If they are already registered for GST in New Zealand and the listed services rules will also apply to them, they do not need to register again, but they do need to let us know by emailing us at [email protected]

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Title: GST mixed use apportionment

Image: Person at a desk looking at documents

Narrator

That brings us to the end of the marketplace rules for listed services. Our final GST change today is the change to the GST mixed use apportionment rules.

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Title: GST mixed use apportionment

The specific mixed-use asset rules are being repealed for periods starting after 1 April 2024.

The general GST apportionment rules requiring a fair and reasonable apportionment method should be applied.

The mixed-use asset apportionment method can be used or continue to be used as a fair and reasonable method.

You do not need to apply for Commissioner approval to use or continue to use the mixed-use asset method. 

Narrator

To simplify the GST apportionment rules, the specific mixed-use asset rules are being repealed for periods starting after 1 April 2024.

The general GST apportionment rules requiring a fair and reasonable apportionment method should be applied.  While no longer compulsory the Commissioner considers the mixed-use asset apportionment method can continue to be used as a fair and reasonable method.

You do not need to apply for Commissioner approval to use or continue to use the mixed use asset method. 

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Title: Tools and Resources

Image: Examples of factsheets created for these changes

GST on listed services information and factsheets available on our website.

Remaining website content will be updated for 1 April

Narrator

Last July, we published guidance on our website for online marketplaces under the sharing economy section and recently we’ve published content for sellers.  These web pages also have links to some helpful factsheets.

Our remaining website content and guides are being updated for 1 April.

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Image: Inland Revenue logo

www.ird.govt.nz/April-Release

Thank you

Narrator

That brings us to the end of today’s presentation.

If you want to find out more about the other webinars we’re going to be running, go to www.ird.govt.nz/April-Release

Thank you for watching.