Questions we've been asked: Goods and services tax (GST)

Real estate sale and purchase - GST apportionments of income and expenditure
Issued August 2000

Section 2(1), Goods and Services Tax Act 1985 - definition of "consideration"

We have been asked if the Goods and Services Tax (GST) treatment of local authority rates apportionments on the sale and purchase of real estate, outlined in Public Ruling BR Pub 99/8, also applies to other income or expenditure that is similarly apportioned.

Public Ruling BR Pub 99/8 published in TIB Vol 11, No 11 (December 1999) (with a minor correction in TIB Vol 12, No 2 (February 2000)), sets out the GST treatment of local authority rates apportioned at the time of settlement on the sale and purchase of real estate.  The Commissioner's view is that rates apportionments form part of the consideration for the supply of real estate and, where the transaction is subject to GST, should be taken into account in calculating the applicable GST.

If other expenditure (such as insurance) or income (such as commercial rental) is apportioned at settlement, these apportionments should be treated in a manner consistent with Public Ruling BR Pub 99/8.  Provided the apportionment is determined on a contractual basis between the vendor and purchaser at the time of settlement, the apportionment will form part of the "consideration" of the supply of the real estate.  For the reasons set out in Public Ruling BR Pub 99/8, the GST consequences will depend on whether the vendor and/or purchaser are GST registered persons and whether the transaction forms part of a taxable activity.

Other pages in: Goods and services tax (GST)

• QB 09/04 The relationship between section 113 of the TAA and the proviso to section 20(3) of the GST Act
• QB 07/04 Trophies and animal products derived from the tourist, hunting and safari industry that are to be mounted in New Zealand - zero-rating
• QB 07/03 Trustees in the context of the Goods and Services Tax Act 1985: does a separate trustee capacity and personal capacity exist and do separate trustee capacities exist for trustees of multiple trusts?
• GST and bloodstock destined for export
• QB 07/01 Zero-rating of supplies of sail-away boats - use as security or offered for sale
• GST treatment of services provided in making videos and films in New Zealand under contracts with non-residents
• GST treatment of funding provided to Treaty of Waitangi claimants by the Crown through the Office of Treaty Settlements
• Advertising agencies: placement and creative services supplied to non-residents
• Funeral expenses paid by funeral directors in connection with funeral arrangements
• Cash prizes in sporting competitions - GST implications for organising club
• Trophies and animal products derived from the tourist, hunting and safari industry: zero-rating under GST
• GST consequences of a cancelled contract
• GST Group Registration of Trusts (July 2004)
• Deductions from GST output tax for subsequent changes to taxable use (April 2005)

Date published: 16 Feb 2006

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