Here are some suggested entries you might make in a Notice of proposed adjustment (NOPA) - IR770 form for this type of dispute. These are a guide only and if your circumstances are similar to the scenario, you will need to provide specific evidence to support your view
You have filed your GST return for the period ending 31/03/2022 without claiming an input tax deduction for a major asset purchase. The main reason was because you did not have a tax invoice showing that the amount included GST at the rate of 15%. The vendor considers the transaction to be a zero-rated supply of a going concern. She has issued a tax invoice at the rate of 0% on that basis.
To protect your position, you now want to issue a NOPA for that GST return to claim the input tax deduction even though the vendor has refused to issue a new tax invoice showing that GST at the rate of 15% was charged. Generally, you have 4 months to file this NOPA from the date your return is received by us.
Suggested entries in the NOPA
What is the change you want?
For a change to an assessment
Form number of the return you filed
You’ll need to enter the form number of the return you filed. For example, GST101.
Period the return covered:
You’ll need to enter the period the return covered. For example, 01/02/2021 to 31/03/2022
What is the amount of the change you want made to the assessment?
You’ll need to enter the amount of the change you want made to the assessment. For example, if you are claiming an additional input tax deduction, you might say, 'I am proposing that I be allowed an input tax deduction of $152,500.00 for the purchase of business assets.'
What facts support the change you want?
Describe the facts and circumstances that support your proposed change. Include any important facts you think we may not know. Relevant facts might include:
- What your taxable activity involves
- The nature of the purchase. For example, earthmoving machinery.
- Explain why you do not have a GST inclusive tax invoice for the input tax deduction. For example 'I am disputing whether the sale of the earthmoving machinery is zero-rated or not.' Also, indicate what evidence you have to support your explanation. For example, the sale and purchase contract, proof of payment, vehicle registration details.
- Set out the main terms of the contract between yourself and the vendor.
- Explain what steps you have taken to obtain the tax invoices.
Why do you think your proposed change is correct?
Explain why you think your proposed change is correct. You'll need to provide details of the law you are relying on to support your view. If you can’t do this, then you’ll need to provide enough detail so we can identify any relevant legislative provisions for you. You’ll also need to explain how the law applies to the facts. For example, you might state:
I am a self-employed earthmoving contractor. I incurred expenditure on the purchase of earthmoving machinery in the period ended 31 March 2022.
I do not have a GST-inclusive tax invoice for the input tax claim. The vendor considers I have purchased her business as a going concern and I believe I have just purchased the machinery. I have attached a copy of the sale and purchase contract and the tax invoice issued by the vendor showing that the sale has been zero-rated. There is no agreement to zero-rate the transaction in the sale and purchase contract as required for a transaction to be zero-rated as a going concern.
I realise that the vendor is selling all her machinery and will be closing her business as a consequence of the sale. However, I believe that I am just purchasing the machinery and not her entire business.
I have paid the purchase price and the machinery is registered in my name. It came as a surprise to me that the vendor treated the transaction as the zero-rated sale of a going concern in the tax invoice she issued. I am disputing this with the vendor.
I understand that Inland Revenue is under no obligation to allow my input tax deduction if I do not hold a tax invoice showing the amount of GST charged. However, I am providing other evidence that shows that the transaction should not have been zero-rated. In particular, the sale and purchase contract which does not contain any agreement that the transaction is zero-rated.
List the documents you’ve attached
In tax disputes you have the responsibility to prove the assessment is wrong. Attach copies of documents you’re aware of that are relevant to the issues you’ve raised. List the documents you've attached. Documents that might be helpful include:
- The sale and purchase contract between yourself and the vendor.
- The tax invoice provided by the vendor, showing the sale is zero-rated
- Bank statements showing the purchase with as much detail as possible.
- . Registration of ownership details for the machinery