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GST on assets sold by non-profit bodies

Chapter 1 – Introduction

1.1 The GST treatment of non-profit bodies (NPBs) is more concessionary than for other taxpayers because NPBs may claim back GST on most of their expenses but in many cases not pay much GST meaning that they often receive GST refunds. This issues paper is not focussed on the ability of NPBs to claim back their GST costs but instead to provide certainty about when GST applies to the sale of the assets of an NPB. Importantly, this issues paper aims to reduce a significant revenue base risk arising from an interpretation of what constitutes the “taxable activity” of an NPB.

1.2 Following the announcement by the Minister of Revenue about the GST treatment of assets sold by non-profit bodies that is to apply from 15 May 2018, this issues paper outlines proposals to:

  • Treat any goods and services for which an NPB has claimed GST costs (input tax) to be subject to GST as part of its “taxable activity” if later sold by the NPB.
  • Apply the same treatment if an event equivalent to a sale such as an insurance pay-out or GST deregistration occurs.
  • For NPBs who may not have expected to have to pay this GST, allow a 12 month period in which GST input tax claimed can be repaid so as to treat the asset in question as never having been part of the NPB’s taxable activity.
  • Include a savings provision that preserves all tax positions taken before 15 May 2018 by NPBs for the scope of their taxable activities.

These proposals are discussed in more detail in chapter 3.

How to make a submission

1.3 Officials invite submissions on the suggested changes and points raised in this issues paper.

1.4 Send your submission to [email protected] with “GST on assets sold by non-profit bodies” in the subject line.

1.5 Alternatively, send your submission to:

GST on assets sold by non-profit bodies
C/- Deputy Commissioner, Policy and Strategy
Inland Revenue Department
PO Box 2198
Wellington 6140

1.6 The closing date for submissions is 15 June 2018.

1.7 Submissions should include a brief summary of major points and recommendations. They should also indicate whether it is acceptable for Inland Revenue and Treasury officials to contact submitters to discuss the points raised, if required.

1.8 Submissions may be the subject of a request under the Official Information Act 1982, which may result in their release. The withholding of particular submissions, or parts of submissions, on the grounds of privacy, or commercial sensitivity, or for any other reason, will be determined in accordance with that Act. Those making a submission who consider that there is any part of it that should properly be withheld under the Act should clearly indicate this.