The platform economy is where websites introduce buyers and sellers to each other.
Starting at the beginning of January 2024, certain platforms called “listed services” are going to have to collect information from you. This will help Inland Revenue ensure people pay tax if they’re selling on the internet.
The listed services are:
- personal services such as ride sharing, tutoring and gardening
- web graphic design
- transport services such as Uber and vehicle rentals
All these platforms are going to need to register for GST regardless of how small they are, except for non-resident platforms, which will be required to register if their supplies exceed $60,000.
If you’re selling and use the services of one of these platforms, it will add a 15 percent GST charge. It will pay the GST and you will receive the exclusive amount zero rated. You include this in the zero rated keypoint in the GST return and you will still be entitled to claim GST on your expenses in the usual way.
If you’re not registered for GST the platform will account for GST at the rate of 6.5 percent, but will be collecting 15 percent from the customer. It will pay the extra 8.5 percent to you.
For example, an Uber driver not registered for GST would charge a fare of $10. The platform would collect $11.50. The Uber driver would get $10.85.
Why is this? Since the Uber driver has had to pay GST on the fare, there needs to be some allowance for GST on expenses and this is how it’s being done. It might be clearer if we say the Uber driver is actually having to put up his fare to $11.50 as though he were GST registered.
Unlike other businesses, any supplies normally zero rated, such as export services, will be standard rated for these platform operators.
If you or anyone you know is thinking about creating a website providing listed services, remember you might have to register for GST.