GST and international postage stamps
2006 amendment to the Goods and Services Tax Act inserts a definition of 'postage stamp'.
Section 5 of the Goods and Services Tax Act
Section 5(11I) of the Goods and Services Tax Act has been amended by inserting a definition of "postage stamp".
Previously, the GST Act defined "postage stamps" according to the Postal Services Act 1998. The Postal Services Act governs the supply of domestic postal services. Postal services involved solely in delivering mail overseas are not covered by the Postal Services Act, whereas operators involved in both domestic and international mail are. Persons that are not regulated by the Postal Services Act may issue stamps, but these are not "postage stamps" as defined in the Postal Services Act (and arguably not subject to the rule in section 5(11I) that would treat the supply as occurring when the stamp was sold).
The GST Act therefore had the potential to treat stamps differently depending on whether or not the stamp was sold by a postal services operator that was regulated by the Postal Services Act. Stamps sold by persons that were not covered by the Postal Services Act and relating to the transport of goods from New Zealand could arguably be zero-rated because the supply of stamps was connected with international mail. This situation arose because the GST Act gives taxpayers the option to treat the redemption of a stamp provided by a person who is not a registered postal operator as the supply instead of the issue or sale, if it is not practical to treat the issue or sale as the supply.
Similar services supplied by a person who was regulated by the Postal Services Act could not be zero-rated because of section 5(11I) and the reference to "postage stamp".
The new amendment ensures that GST applies to the supply in New Zealand of all stamps connected with mail and is consistent with the general policy of taxing services that are consumed in New Zealand at the single rate of 12.5%. The New Zealand-based sender of the mail is considered to receive the benefit of having it sent to another person and therefore as having consumed the postal services in New Zealand.
The amendment removes from the GST Act the reference to the definition of "postage stamp" contained in the Postal Services Act and replaces it with a broader definition of "postage stamp" in section 5(11I)(a) of the GST Act.
The new definition refers to an adhesive label, or mark or design, that is:
- issued or sold by a person to another person; and
- affixed to, impressed on, or printed on stationery; and
- indicates pre-payment of the fee chargeable for the carriage of a letter or parcel, or other article; and
- not intended to distinguish the article to which it relates from similar articles carried by the same person.
The new definition focuses on products that indicate pre-payment for carriage but are not specific to the parcel or article on which they are attached. Examples of adhesive labels that are not intended to be covered by the amendment include adhesive receipts that are particular to the parcel in terms of the amount charged (for example, PAT labels) or that uniquely identify the parcel in some manner (for example, a barcode).
The amendment applies from the date of enactment, 3 April 2006.