On Jul. 10, NZ Tax guided re new rules passed into law re tax settings.
NZ Tax said new rules have been passed into law to ensure NZ Tax's tax settings remain fit-for-purpose for the growing sharing economy; provided overview re same.
Sharing economy operates via online marketplaces (digital platforms) i.e. website/app.
Online marketplaces connect buyers to sellers offering their skills/assets/labor for hire.
Rapid growth in sharing economy; hard for tax authorities to see marketplace activity.
Good and Services Tax
From Apr. 1, 2024, New Zealand and offshore based online marketplaces must collect and return goods and services tax (GST) on the following listed services (legislatively defined) when they are performed, provided, or received within New Zealand.
Said that in addition, at the same time, a new flat-rate credit scheme comes in, which is aimed at minimizing compliance costs for sellers who are not registered for GST.
OECD's Model Reporting Rules
From Jan. 1, 2024, New Zealand is using Model reporting rules for digital platforms.
Marketplace operators who are New Zealand tax residents must report information to NZ Tax re sellers, their online income earned from certain activities, using OECD’s XML schema; information for Jan. 1, 2024 - Dec. 31, 2024 due to NZ Tax by Feb. 7, 2025.
Tax authorities who have implemented the OECD rules will then exchange information.
Effectiveness
From Jan. 1, 2024, New Zealand is using Model reporting rules for digital platforms.
From Apr. 1, 2024, offshore based online marketplaces must collect GST per above.
Information for Jan. 1, 2024 to Dec. 31, 2024 is due to NZ Tax by Feb. 7, 2025.
Dec. 2023 Guidance Published
On Dec. 18, 2023, NZ Tax said it published Income reporting rules guidance on Dec. 12 re above, on how to report information, and information that must be reported.
In addition, regarding due diligence requirements; as well as information for sellers.
From Oct. 2024, online marketplace operators must register with NZ Tax for a Digital Platform Interface (DPI) account; using this account, they will file reports by Feb. 7 each year; online marketplaces must send sellers a copy of same by Feb. 7 each year.
Penalties may apply if online marketplace operators do not meet the requirements set out in the Model reporting standard for digital platforms or fail to take reasonable care.
A marketplace operator must complete due diligence responsibilities for new sellers by Dec. 31 of a reportable period; for sellers that are already registered on a marketplace as of Jan. 1, 2024, the due diligence procedures must be completed by Dec. 31, 2025.
NZ Tax requested these be reported by Feb. 7, 2025, if they are able to be reported.
Online marketplaces must keep records showing steps taken to collect the information and the information relied upon; may be charged penalties if such records not kept.
Must also keep this information for at least 7 years after end of the reportable period.
Guidance includes fact sheet Information reporting for the sharing economy - sellers.
On Oct. 29, 2024, NZ Tax said platform operators who are required to collect and report information about sellers on their platforms can now register for a DPI account.
Only applies to platform operators who are tax residents in NZ and those who connect buyers with sellers of relevant services; registration can be completed in myIR portal.
Platform operators must report the required information by Feb. 7 each year.
