GST News - 2006

GST News September 2006

• Recent GST law changes
• Range of IRD numbers to be extended
• Charities Commission update
• Your views on GST News
• Cancelling GST registration
• GST resources on our website.

Welcome to GST News

We send you this newsletter twice a year, in March and September, to tell you about Inland Revenue services, tax law changes and topical issues relating to GST.

If you have a GST topic you'd like to see covered in this newsletter, please write to the Editor, GST News, PO Box 2198, Wellington or email us at gst.news@ird.govt.nz and we'll aim to cover the topic in a future edition.

Please pass this newsletter on to the person who deals with GST in your business.

Recent GST law changes

Zero-rating of goods outside New Zealand at time of supply

Previously, if a good or service was outside New Zealand at the time of supply it could be zero-rated. Now, for supplies made on or after 19 May 2005, we allow zero-rating of goods outside New Zealand, only if the goods are not in New Zealand at the time of delivery to the final user. This prevents a third party from zero-rating supplies intended for delivery in New Zealand.

Aligning GST and provisional tax payments

New legislation was passed in April 2006 to improve the timing and frequency of tax payments. Over the next two years, we'll be aligning the due dates for GST and provisional tax payments and introducing a new option to calculate provisional tax.

If you're registered for GST and pay provisional tax, the new calculation option will allow you to base your provisional tax payments on a percentage of your GST taxable supplies.

By aligning the due dates for payments, it will make it easier for you to pay your GST and provisional tax payments, as you'll be able to pay these at the same time. The changes may also help you with your cash flow by aligning the payment of provisional tax more closely to when you earn your income.

Over the coming months we'll be updating our website with more information.

GST on gifts and estate distributions

Recent changes to GST legislation have clarified the treatment of GST on supplies that are either distributions from an estate or gifts from another party. You'll no longer be required to calculate a market valuation of the supply, because neither party will need to include this in the GST returns. To qualify, all of the following conditions must be met:

• the gift or estate distribution is given to an associated person
• both parties are GST-registered
• the supplies must be used in a taxable activity from the time of supply.

Range of IRD numbers to be extended

We're extending IRD numbers to 9 digits as we'll soon have used up the 8 digit series of numbers.

Who will have a 9 digit IRD number?

When the current number range runs out (expected to be early to mid-2008), all new customers will be issued with IRD numbers that are 9 digits long. Existing customers will continue to use their current numbers.

This will provide continuity and ensure that we have numbers for:

• new businesses
• our increasing population
• family trusts
• charities, and
• other new customers.

What do you need to do?

If you currently have an IRD number, you don't need to do anything. Software and systems will need to be able to accept both 8 and 9 digit numbers. We're contacting all known software and payroll providers about this change, so that they'll be able to update their products.

If you need more information, please email us at number.extension@ird.govt.nz

Charities Commission update

In our March 2006 newsletter we advised that the Charities Commission would be accepting registrations in mid-2006. The launch of the Charities Register has been deferred because establishing, testing and implementing the Register in the most effective way needs more time than originally anticipated. It will now open on 1 February 2007 and charitable organisations will have until 30 June 2008 to register, before their tax exemptions are affected.

For more information call the Charities Commission on 0508 CHARITIES (0508 242 748) or visit their website www.charities.govt.nz

Your views on GST News

In March this year, some of you received a GST News survey along with your March Goods and services tax return (GST 101). We'd like to thank those of you who took the time to complete the survey for us.

We've summarised the results from the key questions here.

• How often do you read GST News and what do you do with it after receiving it?
  Nine out of ten respondents say they always or sometimes read GST News and 58% said they keep GST News for future reference.
• How do you rate the content, presentation and relevance of information in GST News?
  Both content and presentation rated very positively; however, a significant percentage would like to see articles that are more directly relevant to their business.
• How often and in what format do you want to receive GST News?
  Over two-thirds of respondents prefer to receive a hard copy of GST News and 60% find te six-monthly issues meet their needs.
• How will we use the results?
  Overall, the survey confirms that GST News is generally well received by most readers. For the future we'll look for ways to increase the relevance and usefulness of content in assisting businesses to meet their tax responsibilities and increase the relevance of topics to small businesses.

We'll also be incorporating other feedback we've received into our online GST-related services. These include general GST information and instructions for filing the online GST return.

Example

We're currently in the process of restructuring the GST section on our website and clarifying the help text of the eGST return. For example, we've been told that the instructions for finding the DLN (document location number), which you need when filing your return using our eGST online filing system, are not clear. Your DLN is a 14 character number (directly under the barcode) found at the top of your paper GST return that we send to you. We've now made the instructions clearer.

Cancelling GST registration

Do any of the following situations apply to you?

• Your business has ceased trading
  If your taxable activity has stopped you can cease your GST registration. If you intend to start another taxable activity within the next few months you can choose to keep your GST registration open. Remember to file your GST returns, even if they're nil.
• Turnover is now under $40,000
  If your taxable supplies for the next 12 months will be less than $40,000, you can choose to cease your GST registration. If you do this you'll no longer be able to charge GST on your sales and you won't be able to claim GST on your purchases. You'll still have to declare your business income for income tax though-it's just the GST registration that you can cease.

How to cease registration

You can download a Business cessation (IR315) form or call 0800 377 776.

You'll need to file a final GST return from the beginning of the taxable period to the date you cease your GST registration. You may need to make an adjustment in Box 9 of your return if you're retaining any business assets.

GST resources on our website

We produce a number of statements and rulings to explain how tax laws affect you. They provide answers to real-life situations that may apply to you as well. Published statements include:

• determinations
• interpretation guidelines and statements
• public rulings
• standard practice statements
• product rulings
• questions we've been asked.

We put these statements through an extensive public consultation process and you can have your say by providing us with comments on the technical and/or commercial aspects of the drafts. We'll acknowledge receipt of your comments immediately and then send a detailed reply to you before the item is finalised.

You can access these statements and rulings on our website under "Public consultation", where you can also sign up to receive email notification when exposure drafts on proposed tax rulings are available for comment.

Kathleen Clement
Manager
Delivery, Planning and Initiation

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Date published: 30 Aug 2006

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