Special Tax Alert - September 2010GST rate change rules finalised |
Following the release of draft legislative amendments regarding the transitional “fixes” to smooth the way for the GST rate rise, Inland Revenue received an influx of submissions.
We are pleased that the Government has listened to the public and adjusted the proposed legislation accordingly. This is represented in the practical solutions devised. However, some systems and operational problems may still exist as we close in on the 1 October deadline.
We have amended our handy table with changes brought about from the second and third readings. These have been noted in blue for ease of reference.
The rate change transitional provision amendments cover the following areas:
- Invoices for pre-October supplies
- "Annual" contracts involving successive supplies
- Insurance contract payments received after 1 October
- Finance leases for goods or services.
These changes are a reaction to some of the practical issues that would have arisen. Some of the changes include extending the 12.5% rate for "annual" contracts and requiring insurers and finance lease providers to notify their customers if they opt to apply GST at 12.5% past 1 October.
The first change helps the insurers; the second change helps those businesses that need to know whether to claim GST back at 12.5% or 15%. However, systems issues may still create problems for them.
Please note that “insurance contract payments received after 1 October 2010” is a new insertion implemented after the second reading.
In relation to the zero-rating of all business-to-business commercial land transactions and the new change of use provisions, submissions are still open on the Bill if you wish to have your say. However, be quick as submissions close for this on 9 September 2010.
For more information please contact us.
Special GST Tax Alert - September 2010
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