QB 22 04

[UNCLASSIFIED]
QUESTIONS WE’VE BEEN ASKED
GST – Importers and recalculated

GST
Issued: 8 June 2022
QB 22/04
This item clarifies when importers can claim input tax deductions where GST is overpaid to
the New Zealand Customs Service (Customs).
Key provisions
Goods and Services Tax Act 1985 – ss 3A(1)(b), 12, and 20(3) and (3C)
Customs and Excise Act 2018 - ss 142 to 145

[UNCLASSIFIED]
QB 22/04 | 8 June 2022
Question
Can an importer who overpays GST to the New Zealand Customs Service (Customs)
claim an input tax deduction for the whole of the GST paid?
Answer
Yes – Customs is prevented from refunding overpaid GST where the importer is a
registered person who can claim an input tax deduction. Therefore, the proper
mechanism for obtaining a refund of overpaid GST where the importer is a registered
person is to claim an input tax deduction for the whole of the GST paid to Customs.
Explanation
1. GST is collected by Customs on the importation of goods (not including fine metal)
into New Zealand.
2. A registered person who enters goods for home consumption under the Customs and
Excise Act 2018 is allowed an input tax deduction for GST levied by Customs, provided
the imported goods are used for, or are available for use in making taxable supplies,
other than:
 the delivery of the goods to a person in New Zealand; or
 arranging or making easier the delivery of the goods to a person in New Zealand.
3. Customs has powers allowing them to refund a duty, including GST, where:
 the chief executive is satisfied that duty has been paid in error, either of law or of
fact
 an importer pays duty on goods based on a provisional Customs value and

subsequently amends the assessment and the final Customs value results in a
lower amount of duty being payable than the importer has already paid
 duty has been paid on imported goods and a lower rate of duty, or an exemption
in respect of the goods, is subsequently approved under the Tariff Act 1988
 the imported goods:
o have been damaged, destroyed, pillaged, or lost, or have diminished in

value or deteriorated in condition, prior to their ceasing to be subject to
the control of Customs; or
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o are of faulty manufacture; or
o have been abandoned to the Crown for destruction or any other form of
disposal prior to their ceasing to be subject to the control of Customs.
4. However, Customs is not allowed to refund GST to any registered person in respect of
goods imported for the purpose of carrying on that person’s taxable activity if the
person is entitled to make an input tax deduction in respect of the goods.
5. Therefore, where GST has been overpaid by a registered person, the proper mechanism
is for the registered person to claim an input tax deduction for the whole of the GST
paid to Customs. The registered person cannot claim the amount back from Customs
or from their customs broker.
6. This issue will only arise if the GST has actually been paid to Customs. If, for example,
GST has been wrongly calculated due to an error of law or fact, and that error is
discovered prior to payment being made, the importer (or customs broker) should
contact Customs to fix the error. In addition, this issue only arises for GST registered
importers who can claim an input tax deduction. If the person cannot claim an input
tax deduction Customs is allowed to refund any overpaid GST along with any other
duty.
Examples
7. The following examples illustrate the above points.
Example 1 – Error of fact
Imports R Us Ltd imports a container of sports bags. It completes its Import Entry but
makes a mistake in calculating the values, resulting in the values being much higher
than they should have been. Imports R Us Ltd pays the Customs duties and GST based
on the erroneous values. Subsequently, Imports R Us Ltd discovers the error and
applies to have Customs amend the duties assessed.
Customs can refund the other duties that have been overpaid. However, Customs is
unable to refund the overpaid GST. Instead, Imports R Us Ltd needs to claim an input
tax deduction for the whole of the GST originally paid to Customs.
Example 2 – Amended provisional values
Big Time Imports Ltd imports a consignment of big brand shoes. It completes its
Import Entry based on the provisional Customs value for the shoes and pays the
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QB 22/04 | 8 June 2022
Customs duties and GST accordingly. Big Time Imports Ltd also claims an input tax
deduction for the GST paid to Customs.
At the end of the income year, Big Time Imports Ltd undertakes its annual transfer
pricing calculations. Following these calculations the value of the shoes it imported is
decreased. Big Time Imports Ltd can amend its assessment and request a refund from
Customs for the overpaid duties. Customs is unable to refund the overpaid GST.
However, as Big Time Imports Ltd has already claimed an input tax deduction for the
full GST paid there is no need to make any further amendments for the GST paid.
References
Legislative References
Customs and Excise Act 2018 - ss 142 to 145
Goods and Services Tax Act 1985 – ss 3A(1)(b), 12, and 20(3) and (3C)
About this document

Questions We've Been Asked (QWBAs) are issued by the Tax Counsel Office. QWBAs answer
specific tax questions we have been asked that may be of general interest to taxpayers.
While they set out the Commissioner’s considered views, QWBAs are not binding on the
Commissioner. However, taxpayers can generally rely on them in determining their tax
affairs. See further Status of Commissioner’s advice (December 2012). It is important to note
that a general similarity between a taxpayer’s circumstances and an example in a QWBA will
not necessarily lead to the same tax result. Each case must be considered on its own facts.
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[UNCLASSIFIED]

QUESTIONS WE’VE BEEN ASKED

GST – Importers and recalculated

Customs and Excise Act 2018 - ss 142 to 145

QB 22/04 | 8 June 2022

 the delivery of the goods to a person in New Zealand; or

 an importer pays duty on goods based on a provisional Customs value and

 the imported goods:

o have been damaged, destroyed, pillaged, or lost, or have diminished in

QB 22/04 | 8 June 2022

o are of faulty manufacture; or

Example 1 – Error of fact

Example 2 – Amended provisional values

QB 22/04 | 8 June 2022

Customs and Excise Act 2018 - ss 142 to 145

About this document

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