What has Changed for Electronic Marketplaces?

From 1 April 2024, electronic marketplace operators like Uber, wherever resident, must collect and return GST of 15% when the service is provided in NZ. GST will also apply on closely connected services. NZ resident operators are also required to provide information about users of their platform to IRD each year.

For businesses that are already registered for GST, you’ll need to mark your income from these platforms as zero-rated, which means the company running the platform handles the tax part. If you receive income directly, you will return 15% GST as normal on that income. You will be able to continue to claim GST on your expenses.

I’m not GST registered. How am I affected?

From 1 April 2024, electronic marketplace operators like Uber, wherever resident, must collect GST of 15% even though you are not GST registered. 6.5% is returned to IRD and 8.5% is passed on to you, as recognition that you are not able to claim GST on expenses. This 8.5% is exempt from income tax.

The GST portion of your expenses will also be considered not deductible for income tax. If you have a mixture of income sources, the calculation of deductible expenses has just got more complicated! For instance, if you use your vehicle for delivery services, but also for another business that isn’t a listed service, you will need apportion your vehicle expenses between the two businesses. You will only claim the GST exclusive expense on the delivery service portion, and the GST inclusive expense on the other business portion.

What Next?

To wrap up, if you're not already registered for GST, think about whether it's worth doing voluntarily. Being registered means dealing with GST returns, while being unregistered means calculating certain expenses differently.

Talking to a tax advisor is key in both situations. They can give you personalized advice that fits your needs and help you with your calculations. Taking these steps now can make handling taxes easier and help you make the most of GST rules for your business.

-       Serena Irving

Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust, and business valuation specialists.

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An article like this, which is general in nature, is no substitute for specific accounting and tax advice. If you want more information about the issues in this article, please contact your advisor or the author.