Hon Peter Dunne

Minister Of Revenue

Friday 23 July 2010
Dunne: Solutions Proposed To GST Rate Change Concerns

Revenue Minister Peter Dunne intends to seek Cabinet approval for legislative amendments around health insurance, general insurance contracts and finance leases before GST increases to 15 percent on 1 October.

Mr Dunne said the proposed changes had come from the work of the recently appointed GST Advisory Panel, which was now working with Inland Revenue on “solutions” to issues raised by the GST rate increase.

“A number of issues had been identified which will arise for businesses as a result of the rate change and these will be addressed by transitional amendments to legislation,” he said.

“Following discussion with the Minister of Finance, I will be recommending changes to grandparent at the 12.5% rate health insurance contracts, general insurance contracts and finance leases that straddle 1 October, subject to certain criteria,” he said.

A further issue surrounding business practices using electronic systems that did not exist in 1989 when the rate last changed had also been identified by the GST Advisory Panel, Mr Dunne said.

”I will be recommending minor legislation changes to accommodate that too,” he said.

Other changes will ensure that certain contracts which have either been fully invoiced and performed or, in some situations, fully paid but not fully performed remain at the 12.5% rate.

A final legislative measure relates to lay-by sales for which the 12.5% rate will apply to payments made before 1 October.

“Legislative change will address compliance costs for affected businesses and where required, provide much needed certainty,” he said.

Inland Revenue officials will work with the GST Advisory Panel on the detail of these changes.

“I am confident we will have done everything we can to ensure that the transition to the new rate is seamless,” he said.

Information about the proposals can be found at www.gstadvisory.govt.nz

ENDS

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