Businesses urged to report GST change issues

Businesses urged to report GST change issues to new advisory panel

By Pattrick Smellie

June 21 (BusinessWire) - Businesses with contracts, leases or transactions straddling the Oct. 1 implementation of the new 15% GST rate are being urged to make the newly appointed GST Advisory Panel aware of any problems they face with the changeover.

Most businesses will have to deal with some changeover issues since every contract, lease and transaction straddling Oct. 1 is caught by GST change from 12.5%, the rate that has been in place since 1989.

At its first meeting last Thursday, the panel identified the following major implementation issues that many GST taxpayers will face:
• Contracts that span the GST introduction date of Oct. 1;
• Sale and purchase agreements agreed before October 1, but whcih become unconditional after Oct. 1;
• Operating and financing leases entered into before Oct. 1 but terminating after that date;
• Tourism product issues, e.g., selling a holiday package before Oct. 1 for consumption after Oct.1;
• Local authorities rates charging;
• GST filing by firms not reporting at Sept. 30, so that part of the return is at the old rate, and part at the new.

The panel will issue advice publicly to all submissions received through its www.gstadvisory.govt.nz website.

However, legislative changes were almost inevitable and would need to be identified "within a couple of weeks," said the chair of the Advisory Panel, veteran tax accountant Frank Owen.

While there would be simple answers for most issues, and there were precedents from the change from 10% to 12.5% GST in 1989, aspects of the law had changed in the last 20 years and "that's where the issues will arise."

In many cases, the advisory panel will take up with the Inland Revenue Department issues raised by taxpayers that require decisions. "Where we aren't happy, there will be a discussion and we will try and work our way through it."

Owen said the panel was pushed for time, with the tax change a little over three months away, having first been announced a month ago in the May 20 Budget after months of foreshadowing.

Announcing the panel, Revenue Minister Peter Dunne stressed the panel was an independent body set up to allow taxpayers to raise the issues the GST change would inevitably raise.

The other panel members are: David McLay, tax barrister; Craig Macalister, tax director, New Zealand Institute of Chartered Accountants; Phil O’Reilly, chief executive, Business New Zealand; Karen Radford, director, New Zealand Retailers Association.

(BusinessWire)

© Scoop Media