Views on GST Reform Called For
November 6, 2009 New Zealand Taxation
The Government has released a discussion paper about proposed changes in GST processing in high-value asset transactions.
With the aim of decreasing the government’s revenue loss in GST, Peter Dunne, New Zealand Revenue Minister, announced the release of “GST: Accounting for land and other high-value assets,” on November 5th. He explained the government’s current GST revenue loss situation, saying “The proposal targets sellers and buyers in transactions involving high-value assets. In these transactions GST revenue can be lost by the government from a small minority of taxpayers deliberately using differing GST accounting treatments or winding up a vendor company so that no GST is paid.”
According the statement, the government experiences an approximated NZ$50 million in lost GST revenue through the property development sector, on an annual basis. It is believed that this figure is only rising. The principal proposal of the paper, according to the Revenue Minister “is to introduce a mechanism known as a domestic reverse charge, whereby the obligation to account for GST in transactions involving land, other assets worth more than $50 million, and those involving ‘going concerns’, would be shifted from the seller to the buyer.”
The paper calls for comment and appraisal of the proposal. “GST: Accounting for land and other high-value assets” can be seen on the IRD’s Policy Advice Division’s website, here.