GST reforms to apply from 1 January next year
Major GST changes relating to financial and imported services will come into force on 1 January 2005, the Minister of Revenue announced today.
The date was set by Order in Council today.
"Legislation to better align the GST treatment of the financial services sector with that of other industries and to introduce a reverse charge to tax certain imports of services was enacted last year but the application date was left open to give affected taxpayers time to make the necessary systems changes.
"From 1 January, business-to-business supplies of financial services, which have been exempt from GST, will be zero-rated for GST purposes. As a result, banks and other financial institutions will be allowed to recover GST on purchases related to the supply of their services to businesses.
"Also from 1 January, the new reverse charge will tax certain imports of services, to alleviate the bias against services supplied by New Zealand residents that are subject to GST. Registered recipients of supplies of imported services will have to add GST to the price of imported services if the same services would have attracted GST if supplied in New Zealand.
"Examples of imported services that will be affected by the new charge include management, legal and accounting services and new software installations, Dr Cullen said.
Draft guidelines on how to work with the new rules are available at www.taxpolicy.ird.govt.nz.
Contact: Patricia Herbert [press secretary] 04-471-9412 or 021-270-9013. E-mail: [email protected]
Technical inquiries to Helen Mackenzie [tax adviser, Dr Cullen’s office] 471-9728