Chapter 4 – Goods and services tax

• Background
• The case for applying GST
• Modifying the GST registration threshold
• Extended marketplace rules
• Digital platforms
• Platform supplies – what activities GST would apply to
• GST returns
• An example of the extended marketplace rules
• Impact of extended marketplace rules on existing GST registered persons
• Digital platforms would need to determine whether GST applied or not
• Facilitation services
• GST on sellers’ costs

4.1 This chapter discusses whether, and how, services provided through digital platforms in the gig and sharing economy should be subject to GST. It seeks submitters’ views on two key questions: whether services supplied through digital platforms in the gig and sharing economy should be subject to GST, and if so, how GST should apply.

Background

4.2 The rapid growth of the gig and sharing economy has resulted in a growing number of small suppliers, many of whom operate under the GST registration threshold of $60,000 in a 12-month period. Generally speaking, GST is not levied on the services they provide (unless these sellers have chosen to voluntarily register for GST).

4.3 The GST threshold recognises that the compliance costs for these small suppliers applying GST would be high, and that because of their size, exempting them from applying GST would not result in competitive distortions. However, viewed collectively, digital platforms facilitate millions of dollars of sales in New Zealand through individual sellers – most of which are not subject to GST. A competitive distortion therefore arises, as traditional suppliers who compete with digital platforms generally do charge GST. As the gig and sharing economy is expected to continue growing, it is timely to review whether supplies of goods and services made through digital platforms in the sharing economy should be subject to GST, putting sellers in the sharing economy on a more level playing field with other businesses.

4.4 In April 2021, the OECD published The Impact of the Growth of the Sharing and Gig Economy on VAT/GST Policy and Administration. This report outlines the impact that the growth of the gig and sharing economy has had on VAT and GST systems worldwide and sets out a broad range of options that countries could consider implementing to address these impacts.

4.5 The options included in the report include promoting education campaigns, developing new information-sharing protocols, and involving digital platforms in the collection of GST. These options all address different problems. For example, if countries wanted to promote compliance with existing GST settings, it might be appropriate to look at implementing education campaigns and new information-sharing protocols. On the other hand, if countries are concerned with the uneven playing field that exists for traditional suppliers and those sellers on digital platforms in the gig and sharing economy, it could be more appropriate to examine whether it is appropriate for digital platforms to return GST on supplies made through them.

The case for applying GST

4.6 The gig and sharing economy provides smaller-scale operators with the ability to earn income through a digital platform with relative ease. This is facilitated by platforms on a large scale and many of these supplies occur below our GST registration threshold and so are not subject to GST. Viewed collectively, the gig and sharing economy has had a disruptive effect on traditional business models who are generally charging GST. The gig and sharing economy has the potential to erode the GST base as more small suppliers shift to operate on digital platforms. It is important we consider applying GST to activities facilitated through digital platforms to ensure that the GST base is protected against this new economic reality and ensure a level playing field with traditional suppliers.

4.7 New Zealand’s GST system has been expanded in the last decade to apply to offshore suppliers of remote services and low value imported goods. A key feature of these recent changes is the role of electronic marketplaces. Special rules treat electronic marketplaces as the supplier of goods or services provided through their platforms instead of the underlying suppliers who include the likes of software developers and goods sellers. These electronic marketplaces have similar characteristics to the digital platforms that facilitate activity in the gig and sharing economy. One view is that the existence of these digital platforms reduces the compliance and administration costs associated with collecting GST revenues for tax authorities. This is because digital platforms have a business model which necessitates them being able to deal with thousands of transactions on an on-going basis, and most digital platforms will already be registered for GST in New Zealand because of the remote services rules.

4.8 If sellers’ activities on digital platforms were to be subject to GST at the level of the digital platform, this would increase compliance costs for sellers who are not engaged in the GST system (to the extent that the sellers wanted to recover GST on the costs associated with making their supplies), and for digital platforms who would need to adjust their systems to ensure they were compliant with any new rules. The design of any new rules could mitigate these increased compliance costs, and this is explored in further detail later in the chapter.

4.9 Collecting GST on transactions facilitated by digital platforms in the gig and sharing economy would have impacts on the fairness of the GST system. Imposing GST on supplies made through these digital platforms could improve fairness in the GST system when making comparisons between sellers on digital platforms in the gig and sharing economy and traditional suppliers (for example motel operators and taxi drivers) who are generally required to register for GST. However, if GST applied to platform supplies regardless of the supplier’s turnover, this could give rise to equity issues as GST would be imposed on sales made by small sellers that operate through digital platforms but not on other small sellers who make sales below the GST registration threshold. One justification for this is that compliance costs are still reduced for sellers, as it is the digital platforms themselves responsible for collecting GST and paying that to Inland Revenue.

4.10 The Government is interested in exploring how GST could apply in the context of the gig and sharing economy. This is for reasons noted earlier: it improves the fairness of the GST system and ensures it remains broad-based and sustainable. The two main options for ensuring activities in the gig and sharing economy are included in the GST base are modifying the GST registration threshold, or extending electronic marketplace rules to make digital platforms liable for the collection of GST. These options are discussed below.

Modifying the GST registration threshold

4.11 One of the options that would support the objectives of maintaining a broad base GST, and fairness in the GST system, is lowering of the GST registration threshold. This could bring more sellers who operate in the gig and sharing economy within the GST system and level the playing field between them and other suppliers who are registered for GST.

4.12 This discussion document does not propose lowering the registration threshold for GST generally. This is for two reasons. First, any general changes to the GST registration threshold would have a broad impact across all sectors of the economy. It is noted that New Zealand’s GST registration threshold is in the middle of the range when compared with other countries’ VAT (value-added tax) systems. The current GST registration threshold seems to strike the right balance between supporting a GST system with a broad base and not biasing competition between suppliers with different business sizes and structures against compliance and administration costs. Second, lowering the GST registration threshold would create a different set of issues in terms of ensuring sellers were compliant with their GST obligations.

4.13 It would be conceptually possible to lower the GST registration threshold for sellers in the gig and sharing economy specifically This option has been implemented to some degree in other jurisdictions. For example, Australia and Canada require all ridesharing drivers to register for GST even if they are below the registration threshold. This option would ignore the fact that there is a third party capable of collecting and returning GST on behalf of their users which reduces the potential for sellers to inadvertently miss (or avoid) their GST obligations.

4.14 The option considered best at addressing the issues of ensuring a broad and sustainable GST base, increasing fairness between suppliers of the same (or similar) services, and reducing opportunities for sellers to avoid their GST obligations would be to extend the current marketplace rules that apply GST to supplies of remote services and low value imported goods provided to New Zealand residents so that these rules also apply to gig and sharing economy activities.

Extended marketplace rules

4.15 Under extended marketplace rules, digital platforms in the gig and sharing economy would be responsible for collecting GST as if the digital platform itself had made the supply, even though the services were performed by the seller on the digital platform. For example, a digital platform that facilitated short-stay accommodation would be treated as the supplier of that short-stay accommodation even though the accommodation was provided by the seller on the digital platform. This would mean that the digital platform is solely responsible and fully liable for collecting and returning GST on the activity that occurs through the platform. To prevent over-taxation of sellers, a mechanism would need to be developed to enable sellers to recover the GST component of the costs incurred in making their supplies through the digital platforms.

4.16 GST would be collected on all in-scope services facilitated through digital platforms in the gig and sharing economy where those services were supplied to customers in New Zealand at the time the services were performed. GST would also apply to supplies of services involving land in New Zealand. This is so short-stay accommodation provided in New Zealand would be liable for GST even if the underlying owner of the land was not a New Zealand resident.

4.17 The benefits of extending the existing marketplace rules to apply to digital platforms in the gig and sharing economy include a more level playing field with traditional sellers. It also reduces opportunities for non-compliance because digital platforms would be responsible for returning GST rather than the sellers themselves. Figure 4 illustrates a basic example of how extended marketplace rules for digital platforms in the gig and sharing economy could work.

Figure 4

4.18 The implications of extended marketplace rules for sellers and the digital platforms are further explained in the Table 2.

Table 2: Implications of the extended marketplace rules

Digital platforms

4.19 Under this approach, a digital platform could be defined consistently with the definition of “platform operator” in the OECD’s model rules which is:

…any software, including a website or a part thereof and applications, including mobile applications, accessible by users and allowing Sellers to be connected to other users for the provision of Relevant Services, directly or indirectly, to such users. The operations of the Platform may also include the collection and payment of Consideration in respect of Relevant Services. The term Platform does not include software exclusively allowing the:

a) processing of payments in relation to Relevant Services;

b) listing or advertising of Relevant Services; or

c) redirecting or transferring of users to a Platform

without any further intervention in the provision of Relevant Services.

4.20 “Relevant Services” includes the rental of immovable property and personal services. Under the extended rules, “Relevant Services” also includes the rental of a means of transportation. These definitions are discussed further below.

Platform supplies – what activities GST would apply to

4.21 The services that would be in scope of the extended marketplace rules are the rental of immovable property (this includes short stay accommodation services and excluding residential accommodation), the provision of personal services (this includes ridesharing and other gig work facilitated through a digital platform and is discussed further below) and vehicle rental (provided the digital platform itself is not the underlying supplier of the transportation). The definitions used in the OECD’s model rules for information exchange could be adapted for GST purposes (recognising that certain modifications would be necessary to maintain consistency with New Zealand’s GST framework).

4.22 The OECD’s model rules define “personal services” as:

A “personal service” is a service involving time- or task-based work performed by one or more individuals at the request of a user, unless such work is purely ancillary to the overall transaction. A Personal Service does not include a service provided by a Seller pursuant to an employment relationship with the Platform Operator or a related Entity of the Platform Operator.

4.23 The OECD notes that a personal service usually falls into one of two categories. This includes work that can be carried out online and is capable of being delivered to other users anywhere in the world (examples include tutoring, IT services, data entry and copywriting). This also includes services that, while facilitated by a digital platform, are physically carried out offline, usually at a specific physical location (examples include transportation and delivery services, housekeeping, gardening, or renovation work). These are all types of services that would be subject to GST in New Zealand if the person performing the services were registered for GST.

4.24 The rental of immovable property includes both residential and commercial property, as well as other immovable property and parking spaces. The supply of accommodation is not always subject to GST in New Zealand (that is, sometimes the supply is exempt). If the OECD’s definitions were to be used in a GST context, certain modifications would be necessary to maintain consistency with New Zealand’s GST framework.

4.25 The rental of transportation means would cover situations where a digital platform facilitates transactions between vehicle owners and customers of the digital platform. It would not be in scope of the extended marketplace rules where the digital platform is the underlying supplier of the vehicle (that is, where the digital platform itself owned the vehicle).

GST returns

4.26 If adopted, extended marketplace rules would require digital platforms to provide GST returns to Inland Revenue on a periodic basis. This could be aligned with the quarterly return periods for remote services and low value imported goods to reduce compliance costs associated with changing digital platforms’ systems. GST would also be payable to Inland Revenue in one lump-sum based on the same rules that apply to GST due from electronic marketplaces under the remote services rules. It would not be necessary for digital platforms to provide Inland Revenue with schedules showing GST attributable to individual sellers, as this information could be obtained by Inland Revenue in another way (see chapter three).

An example of the extended marketplace rules

4.27 Example 4 shows how extended marketplace rules would work in the context of digital platforms returning GST on behalf of sellers in the gig and sharing economy. For simplicity, the example ignores the fee the digital platform would charge the seller for connecting the seller with a buyer of the service.

Impact of extended marketplace rules on existing GST registered persons

4.28 If extended marketplace rules were adopted, this could have an impact on persons who are already registered for GST and who were currently returning GST for their platform supplies. Either the rules would allow those sellers to continue returning GST (and the rules would also enable other sellers to register for GST themselves and manage their own GST obligations) or the rules would not allow sellers a choice, and that would mean that digital platforms would be responsible for returning GST for all platform supplies. These two options are discussed further below.

Sellers could opt to return GST for their platform supplies

4.29 This could allow sellers who were registered for GST (or who wanted to register for GST) to elect to collect GST for their platform supplies themselves. This would require digital platforms to be able to identify which sellers on their platform were registered for GST and which sellers were not, so that it could charge the correct GST itself.

4.30 The Government is interested in whether there would be practical issues for sellers and digital platforms in implementing this option. For example, would it increase compliance costs for digital platforms if required to determine the GST status of all sellers on the platform? Are there issues for sellers who would want to charge GST themselves?

4.31 Allowing sellers to opt out of the extended marketplace rules could present compliance risks and result in GST not being collected that should be. This is because sellers could purport to be registered for GST to the digital platform to reduce their pricing (making them more competitive to potential buyers) even if they were not registered. There is also a risk that some sellers could register for GST and not comply with their GST obligations (for example they may not charge or return the correct amount of GST to Inland Revenue). Lastly, if the extended marketplace rules were elective then this would reduce the efficiency of these rules. This is because individual sellers would still be returning GST to Inland Revenue when GST collection could be more efficiently dealt with at an aggregate level by the platform.

Digital platforms would return GST on behalf of sellers for all platform supplies

4.32 The other option is that digital platforms return GST on all supplies made through their platforms, irrespective of whether the sellers are registered for GST or not. GST registered sellers who make other supplies would still be responsible for accounting for GST on those supplies in the ordinary way, but would no longer be responsible for accounting for GST on supplies made through digital platforms.

4.33 Compared with option 1, this option seems to have reduced complexity. This is because digital platforms would not be required to determine the underlying GST registration status of the seller. Digital platforms would collect GST for all sales through the platform which simplifies processes for the digital platform. Requiring digital platforms to collect GST on all sales through the platform also means that sellers would not be able to avoid their obligation to charge GST on their supplies made through digital platforms.

Digital platforms would need to determine whether GST applied or not

4.34 If digital platforms were involved in collecting GST on behalf of sellers, the digital platforms would need to know when to charge GST and at what rate. In many cases it would be clear that GST should apply as the services facilitated by digital platforms would be physically performed in New Zealand and would not be remote services (such as ridesharing services or short-stay accommodation). Some personal services that fall within the scope of the extended marketplace rules would currently be caught under the remote services rules and would therefore already be subject to GST. If extended marketplace rules were implemented in the gig and sharing economy, the interaction between those changes and the existing remote services rules would need to be reviewed to address any overlap.

4.35 Extended marketplace rules would also need to come with rules that made it clear when digital platforms were required to charge GST and at what rate. For example, exported services through digital platforms would not be subject to GST at the standard rate and would instead be zero-rated. It is not the intent to change the GST treatment of exports. GST would apply at the standard rate to services provided in New Zealand – for example, short-stay accommodation and ridesharing services, irrespective of the tax residence of the recipient.

Facilitation services

4.36 Extended marketplace rules would require digital platforms to return GST to Inland Revenue on all supplies made through the platform. One question that arises in this context is how to deal with the GST treatment of facilitation services provided by digital platforms to sellers,[7] as fees for these services make up a component of the total price that is paid by buyers.

4.37 In the remote services rules, facilitation services provided to GST registered persons are generally non-taxable or zero-rated. If this rule were to be maintained in the context of extended marketplace rules that require platforms to withhold GST on sales made through their platforms, then this imposes compliance costs on the digital platform as they need to determine the GST registration status of sellers and charge different fees depending on whether the seller is GST registered or not.

4.38 It follows then that consistent treatment of the facilitation fee is desirable in the context of the extended marketplace rules to reduce compliance costs on platforms. To ensure consistency, facilitation fees charged by digital platforms to sellers could be zero-rated or standard-rated. Officials consider that zero-rating facilitation fees would be the preferable option but are open to submissions on this point.

4.39 In the context of the extended marketplace rules where GST is charged on the entire value of the supply by the platform, there is no risk of GST not being paid by zero-rating the facilitation fee. The advantage of zero-rating over standard rating is that platform sellers will have one less GST cost that they would need to recover. As one of the key questions of extending the marketplace rules to unregistered sharing economy sellers is how these sellers will recover their GST costs, removing the need for input recovery on the facilitation fee helps lessen this concern.

4.40 The way that this would work in the context of extended marketplace rules is that the platform, as the deemed supplier, would return GST on the entire supply in their GST return (including the facilitation component). The key point of difference is that GST would not be charged on the separate supply of the facilitation fee. Consider example 6.

4.41 As example 6 demonstrates, zero-rating the facilitation fee means that platform sellers will not have to claim back the GST cost of the facilitation fee. Options to allow sellers to claim back their GST costs are considered in the next section of this chapter, but depending on what option was chosen the zero-rating of the facilitation fee could provide some benefits. For example, if a seller was required to register for GST to claim inputs, they may not necessarily choose to do so (particularly if they only provided services through a digital platform on a part time basis and considered the compliance costs of registering was not worth any GST deductions they may recover). Zero-rating the facilitation fee means this particular GST cost would not be incurred by a seller who chose not to register for GST.

4.42 From the perspective of the platform, both options (either zero-rating or standard rating all facilitation fees) means platforms would not be charging a variable amount of GST depending on the GST registration status of the platform seller, and so is a reduction in compliance costs for the platform.

4.43 Submissions are welcome on whether the Goods and Services Tax Act 1985 should be amended to zero-rate facilitation services, whether to standard-rate facilitation services or whether the status quo should be retained.

GST on sellers’ costs

4.44 If digital platforms start charging GST on supplies made through their platforms, sellers will still need a method for claiming back GST on their expenses. For example, a ridesharing driver will buy fuel and might buy a car on which they have been charged GST and a guest accommodation host will be charged GST on electricity, rates and insurance and cleaning, repairs, or property management services. If sellers are not able to claim back GST on their inputs, then they would be over-taxed, and this would create a competitive distortion when comparing those sellers with traditional suppliers who are able to claim back GST on their costs.

4.45 The best method for sellers to claim back GST on their costs is difficult to determine and submissions on this point would be welcome. There are trade-offs between accuracy and simplicity. Some sellers, who are already registered for GST for example, might not experience an increase in compliance costs. However, for many sellers who have not needed to interact with the GST system in the past, if digital platforms were charging GST for their sellers’ activities, there will be an increase in compliance costs for sellers who want to claim back GST on their costs. There may be additional compliance costs if sellers need to account for GST and make adjustments for their private use of some assets they use in their activities in the gig and sharing economy such as holiday homes or a ridesharing vehicle (some options to reduce these costs are discussed in chapter 5).

4.46 There will also be an increase in administration costs faced by Inland Revenue if thousands of new digital platform sellers are brought into the GST system.

4.47 This chapter discusses three different methods for sellers to claim back GST on the costs of their expenses. None of these methods involve the seller being responsible for returning GST for supplies made through the digital platforms. The first method requires sellers to register for GST and file returns, claiming GST back on their expenses and applying the apportionment and adjustment rules if applicable. The second method is a flat rate scheme, which involves digital platforms charging GST at the standard GST rate and returning only a proportion of that to Inland Revenue, with the remainder being passed on to the seller in recognition of the fact that there will be unrecoverable GST on their costs. The third method involves sellers claiming GST back on their expenses through their end of year income tax return.

Standard GST registration

4.48 Under this option, sellers would be required to register for GST and file GST returns in the usual way to claim back the GST on their expenses. Sellers would only be required to account for GST on sales made for other supplies off the digital platform, and provided they met the criteria for a standard GST registration.

4.49 New rules would need to be added to the Goods and Services Tax Act 1985 to deem a zero-rated supply of services from sellers to the digital platform. This would be necessary to enable sellers to recover costs for making those supplies.

4.50 One clear advantage of this approach is that it provides the greatest level of accuracy as it allows sellers to claim a GST deduction for the GST incurred on their actual costs. This approach also achieves consistency with other GST registered suppliers who also claim a GST deduction on the actual costs of their expenses through the same mechanism. This approach would also require the least amount of change for taxpayers who were already registered and filing returns for GST, and for Inland Revenue because GST returns, and registration processes already exist and would require few changes.

4.51 This option is expected to result in a significant increase in GST registrations. Sellers required to register for GST to recover costs related to their platform supplies would therefore face an increase in compliance costs relative to the status quo. Sellers already registered would change their practices in completing their GST returns from including standard-rated sales to zero-rated sales, and would otherwise face comparable compliance costs to now.

4.52 Another disadvantage of this option is that when a platform seller has some private or exempt use of their assets then they would need to apply the GST apportionment and adjustment rules to account for this private use. These rules are currently complex and have high compliance costs. Some options for simplifying these rules in the context of the gig and sharing economy are discussed in further detail in chapter 5.

4.53 With this option, it is possible that a special type of GST registration may need to be designed to make it clear that the GST registration was for the purposes of enabling sellers to recover GST on their platform-related costs. This would mean that sellers who registered for this purpose only would not then be required to return GST on supplies made provided they did not satisfy the standard GST registration criteria. For sellers that are already registered for GST, they would continue filing GST returns in the normal way (but would not account for GST on sales made through the digital platforms).

Flat rate scheme

4.54 Flat rate schemes are not uncommon in countries with VAT systems.[8] New Zealand does not have one, but one could be considered in the context of the gig and sharing economy.

4.55 Under a flat rate scheme, suppliers collect GST at a rate determined specifically for the industry that the supplier operates in. The rate is lower than the standard GST rate. Where suppliers use a flat rate scheme, they are not able to claim GST deductions for expenses incurred in making their supplies. This is because the reduced GST rate should account for this these expenses to some degree. The supplier will still collect GST at the standard rate, but they will only remit the amount specified by the flat rate to the tax authorities. This means they can keep the difference between the standard rate and the flat rate as a proxy for the GST on their costs. In this sense, a flat rate scheme is less accurate than a scheme in which suppliers calculate their individual inputs, however, it does reduce the compliance costs of individual sellers.

4.56 In the context of the gig and sharing economy, a flat rate scheme could be designed that would require digital platforms to collect GST at the standard rate, with them only being required to return a proportion of this to Inland Revenue. The difference between the standard rate and the amount returned to Inland Revenue would then be passed on to sellers in recognition of the GST embedded in their costs.

4.57 If a flat rate scheme were implemented, the effect on already GST registered sellers would depend on whether changes were made to require all supplies made through digital platforms to be subject to the flat rate scheme. For example, changes could be made to enable GST-registered sellers to continue filing their own GST returns, whereas the flat rate scheme would apply to unregistered sellers.

4.58 The advantage of a flat rate scheme is that it can reduce compliance costs for sellers who solely make supplies on digital platforms. In an apportionment context, a further advantage of a flat rate scheme is that sellers may not need to account for private use of assets as no GST deduction could be claimed.[9] As sellers do not claim inputs under a flat rate scheme, the risk of fraudulent input claims is eliminated.

4.59 The flat rate scheme concept is simple but a problem with it is determining the rate that should apply. Compared to a standard GST registration, the flat rate scheme would result in some sellers being over-taxed, and some sellers being under-taxed.

4.60 To determine a rate that approximates the amount of GST sellers would be able to claim back through a standard GST registration would be difficult, if not impossible. This is because different activities have different cost ratios, and different business set-ups have different cost profiles. For example, a ridesharing driver who leases their vehicle would have different GST costs to a driver who does not. Those who provide short-stay accommodation services will have different costs to those who provide web design services through a digital platform.

4.61 Furthermore, the goal of reducing complexities and compliance costs is compromised when sellers either are, or must be, registered for GST in terms of the standard rules. This might happen when a seller has off-platform supplies. Examples of this include sellers who provide short-stay accommodation through a digital platform and run a bed-and-breakfast, along with sellers who provide ridesharing services who may also be required to be registered for GST for taxi rides they supply to passengers as a self-employed driver for a traditional taxi company. These factors complicate the operation of a flat rate scheme.

4.62 Some flat rate schemes overseas allow for actual GST to be claimed for assets over a certain cost threshold, despite the flat rate that applies. To improve the fairness of the flat rate scheme this would need to be considered further. Another key consideration is whether transitional rules would apply to those who had previously purchased assets for use in their taxable activity and are currently filing GST returns. The solutions to these issues could increase the complexity of the flat rate scheme.

Refunding GST on costs as part of the annual income tax return process

4.63 This option would allow sellers who were not registered for GST to claim GST back on costs with a GST component as part of the process of filing their income tax returns. This would be achieved by enabling sellers to get a refundable tax credit, which represents the GST component of their income tax expenditure, when they file their income tax return. It would not apply to sellers who were registered for GST, because GST on their costs would be recovered using the GST return process.

4.64 This method could be compulsory or optional for sellers. If compulsory, sellers would only be able to recover GST on their costs associated with making platform supplies by claiming their credits through the income tax return process. If optional, sellers could opt-out of this process by registering for GST and accounting for GST on their expenses in the normal way.

4.65 This method is intended to reduce compliance costs for sellers by integrating the method for claiming GST back on their expenses into the income tax return process. It means that sellers do not need to register for GST and comply with, GST rules.

4.66 This method could also reduce opportunities for fraudulent GST refund claims. This is because, to obtain a refund, the seller would need to demonstrate that expenses have been incurred for sales facilitated by a digital platform and include this information in their income tax return.

4.67 The main disadvantage with this method is that sellers would not get the benefit of the GST refund until they file their end of year income tax return. From a timing perspective this is less frequent than if the seller was registered for GST and filing returns on a monthly, two-monthly, or six-monthly basis.

Table 3: Summary of options to claim GST on sellers’ costs