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New Zealand Issues Guidance On Biannual GST Filing

by Mary Swire,, Hong Kong

17 October 2017

New Zealand's Inland Revenue Department (IRD) has published a practice statement explaining in which cases the Commissioner will exercise the discretion to allow registered persons to remain or become six-monthly return filers for goods and services tax (GST) purposes.

A GST-registered person may apply to the Commissioner for a six-monthly filing frequency if their taxable supplies in any 12-month period do not or are not likely to exceed NZD500,000 (USD358,900). This figure is calculated on a GST exclusive basis.

In addition, a person may also apply for a six-monthly filing frequency regardless of their level of taxable supplies where they make seasonal supplies. That is, where 80 percent or more of their taxable supplies are made within a six-month period that ends at any day within the last month of the person's income year.

According to the practice statement, where a person who has been allocated a six-month filing frequency ceases to meet the criteria for that approval, they will be required to change their filing frequency following the end of the return period that aligns with the end of the 12-month period in which they ceased to meet those requirements.

However, the statement provides that a person is not required to cease using a six-monthly filing frequency if the breach of the taxable supplies threshold is one-off. A person may remain a six-month filer if they expect their taxable supplies to still be within the threshold for the following 12-month period.

The recently enacted Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Act 2017 addressed technical issues with the eligibility to file six-monthly GST returns and introduced this exception allowing a person to file six monthly even if they have a one-off breach of the threshold.

The IRD said: "A six-monthly filing frequency has the obvious compliance cost advantage of requiring only two returns to be filed each year. It will also delay the liability to pay GST output tax on some transactions. However, these advantages must be weighed against the effect of delaying the ability to claim GST input tax."

TAGS: individuals | compliance | VAT tax authority guidance | tax | value added tax (VAT) | goods and services tax (GST) | tax authority | New Zealand | services | VAT compliance matters

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