Overview

This bill introduces a new rule to require GST-registered vendors in most cases to charge GST at the rate of zero percent on the supply to a registered person involving land or in which land is a component. The bill also streamlines transactions involving nominated persons, clarifies the boundaries of the definition of “dwelling” and “commercial dwelling” and simplifies the method for apportioning input tax deductions for goods and services that are used for both taxable and non-taxable purposes.

Other matters in the bill include amending the “on premises” fringe benefit tax exemption, allowing deduction by the Commissioner of Inland Revenue to make deductions of tax from joint bank accounts and various other remedial matters relating to a broad range of subject matter, including the tax treatment of emissions trading and the Auckland council restructuring.

Sixteen submissions were received on the amendments. Most submissions supported the intent of the bill, but raised concerns around the practical application of the proposed GST rules.

This report sets out officials’ detailed responses to those submissions. Officials have taken into account the recommendations in submissions seeking further simplification and certainty in relation to the proposed GST rules. As a result, numerous changes to the bill of a largely technical nature are recommended. Officials have not, however, recommended changes to the fundamental design and structure of key policies reflected in the bill.