GSTnews - 2008
GST News March 2008
- Income tax returns for the 2008 tax year
- GST late filing penalties
- The ratio option
- New due dates for provisional tax
- Do you pay GST six-monthly?
- GST offsets (transfers)
- Online Services are moving
- Consumable stores and zero-rating
- Shared tax invoices
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 6140 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.
Income tax returns for the 2008 tax year
The table below shows when we'll issue annual income tax returns for 2008.
| Return type | Date issued by |
|---|---|
| Individual tax return (IR3) | 28 May 2008 |
| Company income tax return (IR4) | 24 April 2008 |
| Estates or trusts income tax return (IR6) | 11 April 2008 |
| Partnership income tax return (IR7) | 11 April 2008 |
| Maori authority income tax return (IR8) | 11 April 2008 |
| Clubs and societies income tax return (IR9) | 11 April 2008 |
| Registered superannuation funds income tax return (IR44) | 11 April 2008 |
GST late filing penalties
New legislation has been introduced to encourage people to file their GST returns on time. This law change won't affect the majority of people, who already file their returns by the due date.
From 1 April 2008, a registered person who files their return late may incur a late filing penalty. But before a penalty is charged, the person's past filing history will be taken into account.
From 1 April 2008 if a registered person does not file their return on time, we'll send a letter reminding them that their return is overdue and letting them know how Inland Revenue can help if they are having problems.
If within a following 12 month period after the reminder notice is issued a subsequent GST return is not filed on time a late filing penalty will be charged and the person notified.
Where a late filing penalty is payable, the amount of the penalty will be $50 for someone on the payments basis or $250 for people on the invoice or hybrid basis.
If you're not already doing so, now would be a good time to consider filing your GST returns online through our website to make sure your return gets to Inland Revenue on time.
The new law is part of a range of changes designed to encourage our customers to work with us. If you have difficulty filing your return, please contact us as soon as possible, preferably before the due date. We'll do everything we can to help you get back on track.
The ratio option
Do you pay GST and provisional tax? Do you operate a small to medium-sized business? Does your income fluctuate during the year? Then please read on!
As part of the changes we're making to the provisional tax due dates, we're also introducing a new and optional way for you to calculate your provisional tax payment - the ratio option.
What are the benefits of using the ratio option?
The ratio option will allow you to base your provisional tax payments on your GST taxable supplies (sales) for each two-month period.
Although the total amount of income tax you need to pay for a particular year won't change, the ratio option makes it easier for you to cover your provisional tax payments because it matches your payments more closely to when you actually receive your income - plus, you'll make six smaller (and variable) provisional tax payments each year, rather than the three larger (and equal) payments you do now.
So, when your income goes up or down during the year, your provisional tax payments will be adjusted accordingly.
Another benefit of using the ratio option is that if you pay the correct amount of provisional tax using the ratio option, you won't be charged any use-of-money interest if you have a provisional tax shortfall at the end of the year.
How does it work?
To find out all about the ratio option, please read A new way to calculate your provisional tax (IR851).
New due dates for provisional tax
From the start of your 2008-09 tax year (for most customers, this will be 1 April 2008), your provisional tax due dates will be combined with your GST due dates. You may remember we changed your GST due dates in early 2007 as our first step towards standardising the GST and provisional tax due dates.
If you file GST returns monthly or two-monthly
These will be your provisional tax due dates:
| Old provisional tax due dates | New provisional tax due dates |
|---|---|
| 7 July | 28 August |
| 7 November | 15 January |
| 7 March | 7 May |
If you file GST returns six-monthly
These will be your provisional tax due dates:
| Old provisional tax due dates | New provisional tax due dates |
|---|---|
| 7 July | 28 October |
| 7 November | 7 May |
| 7 March |
If you use the new ratio option
These will be your provisional tax due dates:
| Old provisional tax due dates | New provisional tax due dates |
|---|---|
| 7 July | 28 June, 28 August |
| 7 November | 28 October, 15 January |
| 7 March | 28 February, 7 May |
Do you have a non-standard balance date?
If your 2008-09 tax year starts either before or after 1 April 2008, please check out your new due dates.
Your due dates will also be printed at the top of your GST and provisional tax return (GST103) that we'll send you.
If any of your due dates fall on a weekend or public holiday, you can pay your GST and provisional tax on the next working day.
Paying your GST and provisional tax together
If you pay both GST and provisional tax, we'll send you a new GST and provisional tax return (GST103) in place of the Goods and services tax return (GST101) we normally send you.
This return will be tailored to your individual circumstances, for example the number of times you pay GST each year and the way you calculate your provisional tax.
The GST103 will have a payment slip attached to the bottom which you can use to pay your GST and provisional tax. Be sure to keep the payment slip attached to the bottom of your return as this will help us identify what your payment is for.
If you'd like to pay your GST and provisional tax electronically, using the facilities on your bank's website, you'll need to use the "GAP" tax type code to help us identify your payment correctly. However, if you only pay GST and not provisional tax, please continue to use the "GST" tax type code.
Do you pay GST six-monthly?
In November 2007, we removed the colour from the text and layout of the GST returns. If you pay your GST every six months, this might be the first time that you've seen these new-look returns.
The change is part of the work we’re doing to combine the GST and provisional tax due dates.
We're introducing a new return called the GST and provisional tax return (GST103) for customers to pay their GST and provisional tax together. It will be tailored to each customer's individual circumstances and needed to be printed on different equipment.
If you pay GST and provisional tax, you'll be able to work out and pay both taxes on your GST return from the start of your 2008-09 tax year.
If you don't pay provisional tax, the only change is the colour of your return.
GST offsets (transfers)
Inland Revenue has been asked whether the purchaser (of a property) can have the resulting GST input tax deduction transferred to the vendor's GST account, to offset the vendor's GST liability arising from the transaction. This is often referred to as a "GST offset" between GST-registered persons.
There is no specific legislative authority in the GST Act 1985 to transfer input tax deductions relating to individual transactions. However, where a GST return period results in a credit of excess tax, section 173M of the Tax Administration Act 1994 provides that taxpayers may ask that all or any part of the excess tax be transferred to another taxpayer.
While it is possible for a GST-registered purchaser to ask Inland Revenue to transfer to a GST-registered vendor any part of an excess GST credit that they may be entitled to have refunded, the following points should be noted:
- The purchaser must put their request in writing.
- We can't confirm any GST offsets in advance. That's because the refund may be less than expected. The purchaser may have made taxable supplies (sales). Or, if the purchaser has overdue tax, the refund may be needed to help pay the amount owing.
- The vendor is ultimately responsible for paying the GST on the property sale, regardless of any GST offset clause in the agreement for sale and purchase.
- If the vendor is relying on the refund from the purchaser to help pay their GST, we suggest that they check with us as the rules for effective date of transfers may differ.
Online Services are moving
This month, the website address for our online services requiring login (including ir-File, Look at account information, Client maintenance, Send and receive mail, and Portfolio investment entity (PIE) file transfer) is changing.
If you log in by using the button on our homepage, we'll take you to the new page. You can then update the link in your bookmarks or favourites.
We're also making some changes to the look and feel of the Online Services web pages, including improving the navigation and personalising menus based on your customer profile.
You can see a preview of these changes on our homepage under "News and updates".
Consumable stores and zero-rating
The supply of consumable stores (eg food, drink, fuel, lubricants) to an aircraft or ship going overseas is zero-rated. Now the law has been amended to allow you to zero-rate consumable stores intended for use on an aircraft or ship bound for an international destination.
The law change, backdated to 21 October 2001, is designed to zero-rate the following consumable stores:
- Supplies to an aircraft or ship making a journey within New Zealand, as long as the journey is part of an international flight or voyage. For example, supplies to a plane travelling from Christchurch to Auckland en-route to Singapore.
- Supplies to a commercial ship (not a pleasure craft) that carries the consumable stores to another ship leaving New Zealand (or to a fishing ship operating outside New Zealand waters).
- Supplies to a non-resident broker, where the consumable stores are delivered directly to a third-party aircraft or ship leaving New Zealand.
Shared tax invoices
Do you supply goods and services to your customers on behalf of other GST-registered suppliers?
A recent law change could help simplify your paperwork. If:
- you're part of a GST group of companies, or
- you're party to an arrangement created by statute
you can issue a single, shared tax invoice to your customers, that takes into account the sales of all suppliers.
A shared tax invoice must meet all the requirements for a "regular" tax invoice. Please make sure the supplier name and registration number are those of the "principal supplier". The principal supplier is:
- the supplier responsible for issuing the invoice, or
- the representative of a GST group of companies.
Alan Quinn
Manager
Customer Insight
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Date published: 03 Apr 2008
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