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Inland Revenue

Tax Policy

Liquidators and receivers changing GST accounting basis

(Clause 140)

Summary of proposed amendment

An amendment is being made to the Goods and Services Tax Act 1985 to preclude liquidators, receivers and voluntary administrators switching from the payments basis to the invoice basis when accounting for GST.

Application date

The amendment will apply from the date of enactment.

Key feature

New section 19(3B) of the GST Act 1985 will prevent a liquidator, receiver, or administrator (as defined in section 239B of the Companies Act 1993) of a registered person who accounts for tax payable on a payments basis applying to change the registered person’s accounting basis to an invoice basis.


If a registered person meets certain conditions, for example, when the total value of taxable supplies for a 12-month period has not, or is not likely to exceed $2 million, the registered person may account for GST on a payments basis. The majority of registered persons (approximately 80 percent) account for GST using the payments basis. The GST Act 1985 allows registered persons who are accounting for GST on a payments basis to change to the invoice basis by applying to the Commissioner of Inland Revenue. There are currently no restrictions on registered persons making this accounting basis change.

It has become standard practice for liquidators and receivers to adopt the invoice basis for accounting for GST, immediately upon becoming a liquidator or receiver of a registered person that accounts for GST on a payments basis. Moving to an invoice basis allows the liquidator or receiver to claim input tax credits for supplies received for which no payment has been made. Changing the accounting basis often results in refunds being made to the liquidator or receiver despite in many cases there being no realistic prospect that the debt, to which the input credit relates, will ever be paid. The current practice does not seem to have a commercial purpose other than to generate GST refunds.