IRD Looks at GST Changes

June 6, 2013 New Zealand Taxation

10 Kiwi DollarsThe IRD is seeking public opinion on proposed changes aimed at easing compliance burdens on the treatment of non-residents and their GST obligations.

On May 5th the Inland Revenue Department issued a new issues paper on the application of Goods and Service tax (GST) to non-residents, calling for some amendments to be made to current tax rules in order to ease the burdens administration and application of the tax.

Under current regulations, GST is not charged on services performed by New Zealand providers for non-residents who are not in New Zealand at the time that the service was performed.

However, complications can arise if the service is performed for someone who was visiting New Zealand at the time that the service was carried out.

The issues paper also points out that if the non-resident individual obtains residency in the future, their resident status may be backdated and may include the time at which the service was performed on their behalf.

The described situations may lead to a situation where GST is not charged on the service, but should have been due to the recipients actions.

The IRD’s issues paper is calling for the GST rules to be amended to ensure that even if the service recipient visits New Zealand they will not be liable to pay GST, as long as the provided service is not the sole reason behind their visit to the country.

The IRD also recommends that the immigration rules also be amended in regards to the backdating of residencies and the interaction with the GST rules, in order to ensure that individuals who are granted residency to New Zealand are not found to be liable to pay GST on services rendered in the past.

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