GST Rule Fixes

08 April 2018

The New Zealand GST system is broadly based with few exemptions or exclusions.  It is designed this way to make it relatively easy to comply with and very efficient to administer. 

Nevertheless as we approach the 30th anniversary of GST being introduced some refinement is still required and a number of interesting issues and rule fixes have been canvassed by Officials in the “GST: Current Issues” paper.

The key reforms discussed include:

  • Clarifying the right to an input tax credit for GST on costs associated with the costs of raising capital.  Input tax credits are not available on such costs as they are deemed to not be incurred in making taxable supplies.
  • Offer large, partially exempt, businesses such as retirement village operators who make mixed supplies to agree an alternative method of GST apportionment with Inland Revenue.
  • Provide an ability to claim a secondhand goods deduction for goods composed partially of gold, silver and platinum.
  • Clarify the ability to zero-rate services provided in connection with land in New Zealand including setting out what services should be regarded as directly in connection with land and therefore standard rated and what can be regarded as indirectly connected or one step removed from the land.

There are also some technical and remedial changes suggested to with:

  • agents acting on behalf of purchasers and their principals;
  • accounting for GST on supplies of goods and services where total consideration is not known at the time of supply;
  • allowing zero-rating of goods and services that are provided in relation to ships and aircraft that are exported under their own power; and
  • ensuring a person remains eligible to receive a refund for overpaid tax due to a clear mistake or simple oversight where they were in a tax payable position during the relevant period.