Download Global indirect tax | KPMG | GLOBAL

GLOBAL INDIRECT TAX
New Zealand
Country VAT/GST Essentials
kpmg.com
TAX
b | New Zealand: Country VAT/GST Essentials
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
New Zealand:
Country VAT/GST Essentials
Contents
Scope and Rates
2
Invoices6
What supplies are liable to GST?
2
What do I have to show on a tax invoice?
6
What is the standard rate of GST?
2
Can I issue invoices electronically?
6
2
Is it possible to operate self-billing?
6
Registration3
Transfers of Business
7
Who is required to register for New Zealand GST?
Is there a relief from GST for the sale of a business
as a going concern?
7
Options to Tax
7
Are there any options to tax transactions?
7
Head Office and Branch Transactions
8
Are there any reduced rates, zero rates, or exemptions?
3
Are there penalties for not registering or late registration? 3
Are there any simplifications that could avoid the need
for an overseas company to register for GST?
3
VAT Grouping
4
Is GST grouping possible?
4
Can an overseas company be included in a GST group?
4
How are transactions between head office and branch
treated?8
Returns4
Bad Debt
8
How frequently are GST returns submitted?
4
Am I able to claim relief for bad debts?
8
Are there any other returns that need to be submitted?
4
VAT Recovery
5
Can I recover GST if I am not registered?
5
Does your country apply reciprocity rules for reclaims
submitted by non-established businesses?
5
Are there any items that you cannot recover GST on?
5
International Supplies of Goods and Services
5
How are exports of goods and services treated?
5
How are goods dealt with on importation?
6
Anti-Avoidance9
Is there a general anti-avoidance provision under GST law? 9
Penalty Regime
9
What is the penalty and interest regime like?
9
How are services which are brought in from abroad treated
for GST purposes?
6
All information reflected in this document was obtained/summarized from KPMG in New Zealand as of October 2011.
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
2 | New Zealand: Country VAT/GST Essentials
Scope and Rates
What supplies are liable to GST?
Exempt supplies include:
Goods and services tax (GST) is payable on taxable supplies.
Taxable supplies are supplies of goods and services made
in New Zealand by a registered person in the course or
furtherance of a taxable activity. Supply includes all forms of
supply.
•
financial services that are not zero rated
•
residential rent
•
supplies of donated goods by non-profit bodies.
What is the standard rate of GST?
The standard rate of GST is 15 percent.
Note: It is not possible to recover GST incurred in making
exempt supplies.
A reduced rate of 9 percent applies to the provision of
accommodation in hotels, motels, and similar for longer than
four weeks.
Are there any reduced rates, zero rates, or exemptions?
Zero-rated supplies include:
•
exported goods and services
•
supplies of going concerns
•
certain supplies of fine metal
•
supplies of financial services to GST-registered persons
making predominantly (75 percent) taxable supplies
•
supplies of land after 1 April 2011 where both the vendor
and purchaser are registered for GST.
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
New Zealand: Country VAT/GST Essentials | 3
Registration
Who is required to register for New Zealand GST?
Any person that is carrying on a taxable activity and whose
current or projected annual turnover in New Zealand is
NZD60,000 or more. If you trade below the registration
threshold, you can voluntarily register for GST.
To register for GST it is necessary to apply for an Inland
Revenue Department number and GST registration.
You can download an IRD Number Application at:
•
•
http://www.ird.govt.nz/forms-guides/number/
forms-500-599/ir596-form-nonindividualirdapp.html (nonindividual)
http://www.ird.govt.nz/forms-guides/number/
forms-500-599/ir595-form-individualirdapp.html
(individual)
You can apply for GST registration online at http://www.
ird.govt.nz/online-services/service-name/services-g/onlinegst-registration.html or download a GST registration form
(IR 360) at http://www.ird.govt.nz/forms-guides/number/
forms-300-399/ir360-form-gstregistration.html
Are there any simplifications that could avoid the need
for an overseas company to register for GST?
Non-residents who make supplies of goods and services
are not required to register for GST if the supplies are made
to GST-registered persons for the purposes of carrying on
that person’s taxable activity. Such supplies are deemed
to be made outside New Zealand and are therefore not
taxable supplies. However, such non-residents can, with the
agreement of the recipients, agree that supplies are made
in New Zealand and accordingly register for and charge GST.
This also enables the non-resident to claim GST input tax.
GST-registration is not required if the NZD60,000 compulsory
GST registration threshold is only met
because of:
•
any ending of or substantial and permanent reduction in
the size or scale of a taxable activity
•
the replacement of any plant or other capital asset.
Reverse charge services: These services are covered in more
detail under the International Supplies of Goods and Services
section.
Are there penalties for not registering or late
registration?
A failure to register for GST when required to do so is
an offense and the offender may be liable for a fine.
Furthermore, where a person registers late, they will
be liable for late payment penalties and interest on the
outstanding amount.
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
4 | New Zealand: Country VAT/GST Essentials
VAT Grouping
Returns
Is GST grouping possible?
How frequently are GST returns submitted?
Yes, provided certain criteria are met. The main criteria are
that there must be 66 percent common ownership among
the members of the GST group, the group members must
account for GST on the same basis (payments or invoice) and
the group members must have the same taxable periods.
Individuals, partnerships, trusts, and companies can all join
GST groups.
Returns are lodged:
•
six monthly, if annual turnover is less than NZD500,000
or IRD approval has been granted
•
two monthly, if annual turnover is less than
NZD24 million
•
monthly, if annual turnover is greater than
NZD24 million.
Can an overseas company be included in a GST group?
Yes, provided the company meets the criteria for group
registration. You can download the GST Group Registration
form (IR 374) at http://www.ird.govt.nz/forms-guides/number/
forms-300-399/ir374-form-gst-groupregistration.html
You can elect a monthly taxable period if your turnover is less
than NZD24 million.
Are there any other returns that need to be submitted?
No.
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
New Zealand: Country VAT/GST Essentials | 5
VAT Recovery
International Supplies of Goods and Services
Can I recover GST if I am not registered?
How are exports of goods and services treated?
No.
Does your country apply reciprocity rules for reclaims
submitted by non-established businesses?
Not applicable in New Zealand. Foreign businesses that
are not registered for GST in New Zealand cannot recover
input GST.
Goods
A supply of goods is zero-rated if the goods are exported by
the supplier or in limited situations by the purchaser. Other
supplies that are zero-rated include:
•
Goods supplied to repair temporary imports or goods in
transit.
•
Ships and aircraft’s stores for use on international
voyages or flights services.
Are there any items that you cannot recover GST on?
You are not entitled to input tax credits on:
Examples of services that are zero-rated include:
•
Acquisitions that relate to making exempt supplies.
Where GST relates to both taxable and exempt supplies,
you need to make an apportionment
•
•
Acquisitions of a private nature. Where GST relates to
both business and private activities, you need to make
an apportionment.
Supplies where the recipient is not a New Zealand
resident and is outside New Zealand, unless the services
are directly in connection with land or moveable personal
property in New Zealand.
•
Services physically performed outside New Zealand.
•
Services supplied directly in connection with land or
moveable personal property outside New Zealand.
•
Intellectual property rights for use outside New Zealand
or to a recipient who is not a New Zealand resident and
is outside New Zealand.
GST input tax can be claimed in respect of entertainment
expenditure and fringe benefits provided to employees.
However, GST must be returned of: the GST fraction of the
entertainment expenditure that is non-deductible for income
tax purposes.
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
6 | New Zealand: Country VAT/GST Essentials
Invoices
How are goods dealt with on importation?
What do I have to show on a tax invoice?
Imported goods are subject to GST when they are entered
for home consumption. Generally the GST is payable upon
importation, unless the Deferred Payment Scheme has been
entered into. This scheme enables you to defer the payment
until the 20th day of the month following the month of
importation. The payment is made by direct debit from your
bank account and covers all importations in the particular
month.
Tax invoices only have to be issued if requested by the
recipient of the taxable supply and if the GST-inclusive value
of the supply is NZD 50 or more. If you have to issue a tax
invoice it should contain the following information:
•
the words tax invoice in a prominent place
•
the name and GST-registration number of the supplier
•
the name and address of the recipient
•
the date of issue of the tax invoice
•
a description of the goods and services supplied
How are services which are brought in from abroad
treated for GST purposes?
•
the quantity or volume of the goods and services
supplied
If you are making less than 95 percent taxable supplies and
you buy in services from outside New Zealand, you will be
required to apply the reverse charge. This is intended to take
away any GST advantage of buying those services from
outside New Zealand.
•
either:
You can download a fact sheet on the Deferred Payment
Scheme (Fact Sheet 17) from www.customs.govt.nz
Under the reverse charge you are required, as the recipient,
to account for GST as output tax on your GST return, and are
able to recover the GST as input tax to the extent of your
input tax recovery ratio.
• the GST-exclusive amount, the GST and the
GST-inclusive amount; or
• the GST-inclusive amount, and a statement that it
includes GST, provided the GST is three – twenty
thirds of the total amount.
Can I issue invoices electronically?
Yes.
Is it possible to operate self-billing?
Yes, provided Inland Revenue Department approval is
obtained.
The supplier must agree that the recipient of the supply
can issue a Buyer Created Tax Invoice and certain other
requirements must be met.
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
New Zealand: Country VAT/GST Essentials | 7
Transfers of Business
Options to Tax
Is there a relief from GST for the sale of a business as a
going concern?
Are there any options to tax transactions?
No.
Yes. In certain circumstances the supply of a taxable activity
as a going concern is zero-rated. Among other things, the
recipient must be GST-registered, and the supplier must
supply all of the goods and services necessary for the
continued operation of the taxable activity. Also, the parties
must agree in writing that the supply is of a going concern.
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
8 | New Zealand: Country VAT/GST Essentials
Head Office and Branch Transactions
Bad Debt
How are transactions between head office and branch
treated?
Am I able to claim relief for bad debts?
Transactions between head office and a branch office are
generally not supplies and therefore there is no GST payable.
An exception is where the branch chooses to register
separately so that it can account for GST separately from
head office. In this case the branch is treated as if it were a
separate entity, so that transactions between head office and
the branch are treated as though they were supplies.
Yes, if the debt is written off as a bad debt. If you
subsequently receive payment for the supply then you will
have to pay back the GST component.
A branch is also treated as a separate person from head
office for the purposes of the reverse charge. In other words,
supplies of services between an overseas head office and
a New Zealand branch are generally subject to the reverse
charge where the New Zealand branch is making less than
95 percent taxable supplies.
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
New Zealand: Country VAT/GST Essentials | 9
Anti-Avoidance
Penalty Regime
Is there a general anti-avoidance provision under GST
law?
What is the penalty and interest regime like?
Yes. It applies in any case where there has been a tax
avoidance arrangement entered into by the taxpayer, and
the arrangement has as one of its purposes tax avoidance
(so long as that purpose is more than incidental). Any
arrangements caught by this provision will be void for tax
purposes.
Civil penalties are payable when GST is paid late or
underpaid.
Late payment penalties are levied initially at a rate of
1 percent on the day after the due date for payment of the
GST, a further 4 percent is then levied if the outstanding
amount remains unpaid seven days after the due date.
A 1 percent incremental penalty applies for every month
thereafter.
Shortfall penalties range from 20 percent of the shortfall
amount for not taking reasonable care, to 40 percent for
gross carelessness, to 100 percent for taking an abusive
tax position, to 150 percent for evasion. These percentages
can be reduced for previous good behavior, or if you make a
voluntary disclosure to the Inland Revenue Department.
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
www.kpmg.com
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information
without appropriate professional advice after a thorough examination of the particular situation.
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent
firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to
obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such
authority to obligate or bind any member firm. All rights reserved.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Designed by Evalueserve.
Publication name: New Zealand – Country VAT/GST Essentials
Publication number: 111202
Publication date: January 2012