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

Trophies and animal products derived from the tourist, hunting and safari industry: zero-rating under GST
Issued July 2003

Background

Previously the status of some services performed by the taxidermy industry had been considered in a TIB item Vol 9, No. 6 (June 1997) titled "Trophies and animal products derived from the tourist, hunting and safari industry: zero-rating under GST".  Currently, the TIB item, in regard to the taxidermy industry, states:

INTERPRETATION

Taxidermy fee

The taxidermy fees are chargeable with GST at the standard rate as they do not fall within the zero-rating provisions of the GST Act.  While the services are supplied to someone who is outside New Zealand at the time the services are carried out, they are in connection with "moveable personal property situated inside New Zealand at the time the services are performed" and are clearly excluded by section 11(2)(e)(ii).

Section 11 of the Goods and Services Tax Act 1985 has been substituted by sections 11, 11A, and 11B pursuant to section 90(1) of the Taxation (GST and Miscellaneous Provisions) Act 2000 with application on and after 10 October 2000.  In particular, section 11A(1)(m) of the Goods and Services Tax Act 1985 has now been inserted into the Act.

Question 

We have received a query regarding whether the TIB item, as far as the taxidermy industry is concerned, is still correct given the amendments to the GST legislation enacted on 10 October 2000.

The TIB item is stated to apply to taxidermists performing the service of processing animal carcasses before they are exported to tourists.  We have also been asked whether the TIB item applies to all taxidermy arrangements in the taxidermy, hunting, and safari industries.

Legislation

Section 11A(1)(m) of the Goods and Services Tax Act 1985 applies to zero-rate services that are provided directly in connection with goods to which section 11(1)(a) to (e) apply.  Section 11A(1)(m) provides:

11A     Zero-rated services

(1)           A supply of services that is chargeable with tax under section 8 must be charged at the rate of 0% in the following situations:

...

(m)                the services are supplied directly in connection with goods to which any one of section 11(1)(a) to 11(1)(e) applies if  supplied to a person who is not resident in New Zealand and who is outside New Zealand at the time the services are performed; or

...

Conclusion

Taxidermy fees are chargeable with GST at a zero rate where they are consistent with the requirements of section 11A(1)(m).  That is, the service must be supplied directly in connection with goods to which any one of section 11(1)(a) to 11(1)(e) applies (that is, goods exported, or goods entered or deemed to be entered for export), and the supply must be to a person not resident and outside New Zealand at the time the services are performed.  Thus, in respect of the provision of taxidermy services, the TIB item is no longer correct due to the change in the legislation.

In relation to non-taxidermy services considered by the TIB item, it may also be noted that the title and drafting of the TIB item may be considered misleading in that it may suggest to some readers that it applies to all participants in those industries discussed in the item.  However the TIB item,in respect of these other matters, is only intended to explain the factual scenarios described.  Therefore, where a taxpayer's particular facts differ from those described in the TIB item different tax consequences may follow.

Other pages in: Goods and services tax (GST)

• QB 10/05: Section 78(3) of the GST Act 1985
• QB 10/02: GST treatment of futures contracts
• 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
• Real estate sale and purchase - GST apportionments of income and expenditure
• Funeral expenses paid by funeral directors in connection with funeral arrangements
• Cash prizes in sporting competitions - GST implications for organising club
• 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: 10 Feb 2006

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