22/10/2021·2 mins to read

Significant upcoming changes to GST tax invoice rules

A new tax bill heralds significant changes to the long-standing rules relating to GST tax invoices and related matters.

The changes are intended to modernise and simplify GST information requirements for businesses. They should provide welcome alignment with the highly automated and integrated invoicing, payment and related financial accounting and record-keeping systems now generally in use.

The bill is likely to be enacted before the end of March next year, with the changes taking effect from the start of the first taxable period after enactment.

Taxable supply information

A supplier will no longer need to issue a tax invoice to a GST-registered customer upon request, and the customer will not need a tax invoice to support their GST input tax claim. Similar requirements for the issue and retention of compliant GST credit and debit notes in relation to altered supplies will also be scrapped.

Instead, there will be requirements to provide and hold 'taxable supply information' and 'supply correction information'. Such information will be much the same as that which must currently be included in tax invoices and credit/debit notes, but will not need to be provided or held in any particular format and may simply form part of general contractual and transactional records created in the course of commercial dealings.

Taxable supply information will generally need to be provided to all GST-registered customers, whether or not they request it. The information need not be provided if the low-value threshold (NZ$200, up from NZ$50 for tax invoices) is not exceeded.

Evidence for input tax claims

The proposed amendments would provide that an input tax deduction must be supported by the registered person’s business records containing taxable supply information which shows that the person has been charged GST on supplies received. It is anticipated that contractual arrangements and associated record-keeping required under commercial law will result in transactional information being created and retained in business records that is consistent with this requirement.

Relatedly, it will be an offence to claim input tax more than once for the same taxable supply.

Buyer-created tax invoices

“Buyer-created tax invoices”, and the requirement to obtain IRD approval to use them, are also to be dispensed with. Instead, buyer-created taxable supply information requirements will apply, with no IRD approval requirement.

What do businesses need to do to get ready for the changes?

For some, the answer may be ‘nothing’, because there is no particular inconvenience or inefficiency associated with complying with existing rules, and ongoing compliance with existing rules (principally issuing and retaining tax invoices) should meet the standard of the new rules.

However, we expect that many businesses will welcome the ability to move away from prescriptive tax invoice requirements which are a burdensome 'bolt on' to modern payment and invoicing systems and frequently simply replicate, in a prescribed form, information which is already provided and held in the course of transactional dealings.

Get in touch

If you would like to talk to one of our tax experts about the changes, please get in touch with one of the contacts (pictured right).

Special thanks to Laura Mikkelsen and Sarah Johnson for their assistance in writing this article.



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