GST is central to New Zealand’s tax system, and accounts for 32% of total tax revenue.
The Government considers GST is working well overall, and the simplicity of New Zealand’s GST is seen as a model internationally.
However, as with the other areas considered in this consultation, the Government is keen to reduce the costs faced by those who need to meet GST obligations.
GST is charged on most goods and services supplied in New Zealand. Those who are required to register for GST charge GST on what they sell, but can claim back the GST on what they buy. At the end of each return period (one, two or six months) they must file a GST return, and pay the difference to the Government (if more GST charged than paid by them) or will receive a refund of the difference (if more GST paid than charged by them).
In 1986 when GST was introduced, these returns were all filed on paper forms, but now around 64% of returns are filed through electronic channels. Most people will need to take information out of their accounting records and put it into their GST returns. Even electronic GST returns cannot currently be submitted automatically from accounting systems.
The key proposal for GST is that once authorised by the GST registered person, business accounting systems will be able to provide direct feeds of information to Inland Revenue, eliminating double entry and the potential for transcription errors that currently exists.
The Government does, at this stage, not propose any change to the information collected on the GST return. However, it is proposed that people filing returns will be able to attach additional information to them if they wish – perhaps to explain an unusually large input tax claim.
The Government does not propose any change to when GST returns and payments are due. However, the Government is consulting on whether GST refunds should only be paid by direct credit into customers’ bank accounts and on whether there should be a threshold above which registered persons should be required to submit their GST information to Inland Revenue in an electronic form.