The experience of a painter dealing with NZ Customs is a salutary lesson about engaging with bureaucracy – and getting your paperwork right. As Nikki Mandow reports, this story comes with a twist in the tail…
In 2021, Jimmy James Kouratoras, a New Zealand-based artist with Māori and Greek heritage, was invited to send some works for a show at a gallery in Aspen, Colorado in the US. A local media report talked about “an exquisite exhibit at the McHugh Gallery of the New Zealand artist and his Hei Tiki Putiputi series”.
Late last year, after the exhibition, the gallery shipped four unsold works back to New Zealand. But that’s when Kouratoras got a surprise. NZ Customs wanted his company JK Productions Ltd to pay $2000 in Goods and Services Tax to reclaim his own paintings. Until he paid up, shipping agent FedEx wasn’t releasing his pictures.
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Kouratoras argued his case with FedEx: GST is a tax for people buying and selling stuff, but Kouratoras wasn’t doing either – just bringing his own work home. So FedEx argued his case with Customs, but Customs wasn’t convinced.
“The goods were exported as ‘Sold – good for final purchase/sale’,” a Customs agent told the FedEx broker. “JK Productions Ltd is a company and GST tax credits would have been claimed on the IRD GST return using the export entry documents.”
Kouratoras asked the Aspen gallery to send him a letter explaining the situation with the artworks and who they belonged to, but nothing changed.
Christmas came and went, then New Year, then January, and the artist, sculptor and printmaker wasn’t just without his paintings, which he needed for another show. He was also racking up a storage bill at FedEx – $15 a day plus GST, or more than $500 in total.
“Art seems to fall in a grey area,” Kouratoras told Newsroom. “Not many people understand artists and paintings and how we move works around. Customs are putting them in the same box as someone importing hats or jewelry.”
Kouratoras is right when he says he shouldn’t be paying GST on his artworks, a Customs worker told Newsroom. "Returning New Zealand goods" has its own category (with its own concession code, 109000D) and is duty/GST-free.
But the Kiwi artist’s experience is a timely reminder about some of the pitfalls around exporting and importing your own things, says Allan Bullot, a partner at Deloitte and a self-confessed GST geek.
Step one is to make sure you are careful with the paperwork on the way out, not just on the way back.
Camera crews, for example, have to be careful when they travel to film in overseas locations if they don’t want to find themselves with a tax bill for their equipment on the way home, he says.
“There are processes you have to go through when you leave to make sure you can prove that the big black shiny high-end camera you are bringing in isn’t a new big black shiny high end camera you bought overseas.”
Of course, in Kouratoras’ case, he was hoping all the paintings would have been sold overseas, so he wouldn’t need to ship any home again.
But thinking about how to declare your goods when they go out of the country, if they might be coming back, is important, Bullot says.
Customs’ thankless task
The theory behind Customs collecting GST on imported goods is around fairness, Bullot says. People who can go overseas to buy their expensive kit shouldn’t get away with not paying the same tax as people buying it locally. It also means NZ shops aren’t at a disadvantage when they have to charge their customers GST on top of the retail price.
In fact, as Newsroom has reported in the past, it can be a tough job for Customs trying to stop overseas-based sellers trying to dodge tax and sell goods cheaply online in New Zealand, without paying GST.
New Zealand travellers can also face a nasty shock if they buy expensive items overseas – a big GST bill when they reenter the country.
There’s a cut-off of $1000, under which price goods aren’t subject to GST, but above that, Customs will be collecting the 15 percent.
“Don’t assume what you buy overseas can come into New Zealand without GST.”
Bullot says Customs has pretty grunty powers to investigate, if they choose to use them.
“Say you went overseas and bought a super high-end computer equipment – $6000-$7000-worth – there's a risk Customs could ask how long you have owned it, and could even look at your credit card statements, and you could end up with a $1000 GST bill.”
The other trap is Kiwi visitors who buy something in a country like Singapore (where GST is 7 percent) or Australia (10 percent), claiming back the GST on their purchases at the foreign airport when they leave.
The trouble is, when they arrive back in New Zealand with all that paperwork about the GST refund, they find themselves having to pay our even higher GST.
Individuals can’t claim the GST back, though businesses likely can, Bullot says.
In fact, he says, in a case like Kouratoras and his paintings, with a $2000 bill and a GST-registered business, his advice would be to take the pragmatic approach and cough up, even if you know you are in the right and Customs in the wrong.
It’s likely to be quicker and cheaper than arguing your case, particularly if you have to get an outside professional involved.
A happy ending
In the end, Kouratoras didn’t have to take the pragmatic approach. After Newsroom contacted Customs, the agency agreed the artist could get his paintings back without paying the $2000 tax.
“Customs held this shipment to verify the returning NZ goods concession applied,” the department told Newsroom in a statement attributed to trade assurance manager Mark O’Toole. “We have been corresponding with the importer and his customs broker to seek the information required to support his claim of returning NZ goods.
“Once that information was received we released the goods, and no GST is payable.”
That’s very good news, Kouratoras says.
“This has been going on since December and until now, I was going around in circles, so much so my wife told me I should get my lawyer involved.”
While his pictures aren’t worth much in terms of canvas and materials – maybe $1000 – they are worth closer to $18,000 each at retail - but not until someone buys them.
“It cost $6000 to send them to Aspen. Once you’ve paid taxes there’s not much left. You are [sending them over to an overseas gallery] for exposure – more eyes on your work.”
Now the impasse is resolved, Kouratoras says FedEx will be charging him just $60 for handling and will be delivering the paintings to his studio in Port Waikato. That gives him plenty of time to get them ready for the Auckland Art Fair in early March.
“I am super happy and relieved, now I can get those paintings and put them into another show. I had them in the catelogue; that’s why it was important to get them back.
“And we’ve got a baby on the way – I just didn’t need this.”
And next time he gets asked to provide pictures for an overseas gallery?
“I won’t do that again in a hurry.”
