GST at 40: simple by design, complex in practice

Sam Hornbrook | Director, Auckland

Length of time working with GST/jurisdictions: I started out in VAT in the UK before moving to New Zealand in 2012. I have now been doing it for 19 years, with 20 getting close!

Specialty areas/What you do: I work on complex GST (and FBT) issues, particularly for investment funds, insurance, retirement villages, aged care and infrastructure projects. I also carry out GST/FBT reviews and am interested in practical uses of AI, both in our own work and in clients’ GST and FBT processes.

Misconception of GST that comes up the most: That GST in New Zealand is simple because it has a broad base. It is a transaction-based tax, so it cuts across almost every industry and applies to many different types of supply, each with its own issues. Answering a GST question often means first understanding the industry, the legal arrangements and what is actually happening in practice. That is also why I still enjoy it. There is always something new to get curious about.

Favourite section or IR publication or case: Section 6 and the meaning of “taxable activity”. It is always good for a debate when teaching new members of the team the core GST concepts, and is a quick way to show them that GST is an interesting tax. Inland Revenue’s interpretation statement on taxable activity runs to 40 pages and still does not cover lots of edge cases. That is just to work out whether someone is carrying on a taxable activity (before you even get into how the GST rules apply). My favourite used to be section 8 (the main charging provision) but so much has been added to it over the years that it is now incredibly long and shows how GST is no longer straightforward.

Most confusing section/rule: The business-to-business zero-rating rules for financial services. They were originally going to apply automatically, but became elective following a submission made when the rules were introduced. That requirement has stuck, even though missing what was effectively a one-sentence notification to Inland Revenue could cause significant GST problems. The rules have softened, but they are still difficult to explain to clients.

Future of GST: Inland Revenue and businesses are investing more in technology, but I do not think that means fewer GST specialists. GST is a major part of the tax take and the rules keep growing. Technology will change how the work is done, but it still needs someone looking after the information going in and checking that the outcomes make sense. I think we may see more GST specialists within Inland Revenue and, in some sectors, the emergence of dedicated in-house GST roles.

Should the GST Act be rewritten? Yes. The GST Act has become a bit of a maze as new rules have been added over time, and it is not always easy to work out how the different sections fit together.

Sarah Kennedy | Director, Christchurch (but covering the South Island)

Length of time working with GST/jurisdictions: 2026 is a dual celebration year for me. GST is celebrating its 40th birthday and I'm celebrating my 21st year working in GST. One of us is officially middle-aged and the other is just reaching adulthood. I'll let you decide which is which.

Specialty Areas/What you do: Non-profit bodies, religious organisations and retirement villages are always interesting. Beyond that, my idea of a good time is untangling a GST fact pattern that makes everyone else quietly leave the room.

Misconception of GST that comes up the most: "It's just 15%, isn't it?" "I just have a quick GST question for you." Two statements that have never once been followed by a quick conversation.

Favourite section or IR publication: s11(3C) and s20(3K), as I was involved in, or the reason for, their development. One of them caused the first GST tears of my career, but like many things worth doing, it was worth the effort in the end. 

Most confusing section/rule: Apportionment and change-in-use are perennial contenders. But my real bugbears are GST definitions that bear little resemblance to ordinary English. A gift with conditions can still be an "unconditional gift", and a "commercial dwelling" isn't part of the "dwelling" definition. If it feels like your GST advisor isn't speaking English, it's probably because the GST Act isn't either.

Future of GST: I hope New Zealand can preserve the broad-base, single-rate approach that makes our GST system so effective. It's one of our greatest strengths. There's still room for simplification though, and if that saves me time and my clients fees, I'm all for it.

Should the GST Act be rewritten? Yes. If Team Rewrite can save future generations from s20(3)(c)(ii)(B)-style references, I consider that a worthwhile legacy. I'd also like a quiet word about the dwelling definition.

I'd also like to submit the dwelling definition as Exhibit A for why Team Rewrite exists.

Jeanne du Buisson | Partner, Auckland

Length of time working with GST/jurisdictions: More than 30 years working in indirect tax (VAT and GST), primarily across South Africa (11 years) and New Zealand (19 years).

Specialty areas/What you do: GST, VAT and Customs, with a particular focus on financial services, tax governance, cross-border transactions, complex restructures and using technology to make GST compliance simpler and more effective.

Misconception of GST that comes up the most: That all the GST rules are in the GST Act… and that GST is simple because it is a transaction tax with a broad base. The basic framework may appear straightforward, but small differences in the facts can completely change the GST outcome.

Favourite section or Inland Revenue publication or case: Inland Revenue’s financial services guidance, given how often it intersects with complex business models.

Most confusing section/rule: The financial services rules, particularly when combined with apportionment and the term “fair and reasonable”.

Future of GST: Greater use of technology and artificial intelligence to automate compliance, improve the quality of data and identify risk earlier. Could we see AI data matching by IR? However, experienced judgement will remain essential as business models and transactions become more complex.

Should the GST Act be rewritten? Yes.

Allan Bullot | Partner, Auckland

Length of time working with GST/jurisdictions: Full time GST since 1996 in both NZ and Canada.

Specialty Areas/What you do:  Everything GST – lots of time in Financial Services, Tourism, Telecommunications, and Property  over the years.

Misconception of GST that comes up the most:  “It is only 15% isn’t it, how hard can it be?”.

Favourite section or IR publication or case:  “How can I choose a favourite child… I love it all”.

Most confusing section/rule: The apportionment rules.

Future of GST:   “So bright it has to wear shades” – GST will be a fundamental part of the New Zealand tax system for decades to come and is likely to have continued evolution, rather than any major revolutions.

Should the GST Act be rewritten? I’m in team “Maybe” depending on what else that means we don’t get, it is always a case of managing limited resources.

Robyn Walker | Partner, Wellington

Length of time working with GST/jurisdictions: I started working as a GST specialist in 2001. I decided to broaden my horizons to other taxes after a few years, but in my role at Deloitte I’ve remained connected to GST as I’ve been responsible for responding to Inland Revenue interpretative guidance and policy proposals on GST.

Specialty Areas What you do: My speciality is tax policy, but I am also responsible for GST questions in our Wellington office, working with the amazing Hana Straight.  

Misconception of GST that comes up the most: It’s simple. Ok, in many cases it is, but in any edge case it’s actually complicated which is compounded by the fact that the GST Act has had 40 years of amendments tacked on that it is now incredibly difficult to navigate. It is due for a makeover.

Favourite section or IR publication or case: Section 8. The section is terrible to read, but at its core it’s trying to ensure that GST is only imposed in situations where it makes sense and carves out some transactions where there is no net revenue gain for the Crown. This saves a lot of compliance costs, particularly when a non-resident is trading with New Zealand businesses.

Most confusing section/rule: Section 20 because it contains multiple provisos, meaning the subsection numbering makes no sense.

Future of GST: GST is going to continue to be number two in terms of revenue generators for New Zealand. It will continue to be an efficient revenue raiser.

Should the GST Act be rewritten? I am the leader of Team Rewrite.

Andrea Scatchard | Partner, Tauranga

Length of time working with GST/jurisdictions:  Been specialising in GST for 25 years in NZ.

Specialty Areas/What you do: It all! A lot of property transactions – is it or isn’t it zero-rated? The zero-rating rules came in 15 years ago, and were meant to simplify the GST treatment of property sales, but in my experience the rules are still often misunderstood and not always dealt with correctly in sale and purchase agreements.

Most confusing section/rule: Anything to do with financial services and businesses carrying on a mix of taxable and exempt supplies (whether those are financial services or GST-exempt accommodation).

Should the GST Act be rewritten? Yes.