How do I handle GST paid to NZ Customs for imported goods?
When importing goods from overseas, GST is calculated at 15% of the landed-cost of the goods and is payable to the Customs agent, not your overseas supplier. The GST paid to Customs needs to appear in Box 13 of the GST return. Therefore, you need to create one Purchase order (bill) to record the overseas purchase and another Purchase order (bill) to record the costs associated with the import.
A Customs agent is usually employed to handle the costs associated with the import. Generally, the Customs agent will arrange payment for, and collection of, the goods on arrival in New Zealand, and may pay your customs duty, freight, insurance and GST liability. Therefore, you will need to either ‘Spend Money’ or ‘Enter Purchases’ then ‘Pay Bills’ to the customs agent for these costs.
To Set Up
Create a Liability Account for Customs GST (2-XXXX). This account will hold the GST paid by you to the Customs agent and will be reflected in Box 13 of the GST return.
This account should be the linked account in your GST return.
Go into the ‘Accounts’ command centre.
Select ‘Prepare GST return’
Select the ‘GST Input Tax Adjustments’ account in Box 13.
Once this account has been setup, record the transaction as pictured below using
1. Using the Purchases command centre, record a transaction from your overseas Supplier as normal, excluding the GST.
2. Use Enter Purchases to enter the Import Agent’s Customs’ charges, taking care with the GST for each cost.
3. On another line, enter the value of the total GST on the Import, using the Customs GST Code.
4. For the import duty charged by the customs agent use the cost of sales accounts
5. For any other expenses the Customs agent may be charging you, (for example, overseas freight and/or insurance) enter as below, selecting the applicable cost of sale account.
This transaction will increase costs and include customs GST on the GST return.
Save the entry as a recurring transaction so you can use it again.
A GST return prepared from the Accounts command centre should now show the value above in Box 13.
PS this method is the most common adopted by NZ importers – other methods exist and can be used provided the accounting entry is correct.