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LAWCOMM 403 long notes.docx
LAWCOMM_403_long_notes.docx
Showing 144 out of 157
LAWCOMM 403 long notes.docx-CONTENTS Tips ...........
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
Page 144
OPERATION OF THE GST REGIME
GST is imposed by the
Goods and Services Tax Act 1985
o
This came into force on 1 October 1986 and imposed a rate of 10%
o
The rate increased to 12.5% in 1989
o
The rate increased to 15% in 30 September 2011
o
These increases are oſten associated with a reducon in income tax to keep tax revenue the same
Who has the obligaon to charge GST?
o
GST registered persons
(including persons that are required to be registered but haven’t done so yet)
that
make “taxable supplies”
must charge GST output tax at the rate of 15% on the value of those taxable supplies
o
Any person (registered or not) imporng goods valued at above $1000 into New Zealand
must pay GST to the
New Zealand Customs (i.e. “Customs GST”)
o
Registered offshore suppliers
must account for GST on their
sales to NZ residents
Overseas suppliers who supply more than $60,000 in goods and services (both imported services and
cross-border remote services) to New Zealand residents are required to be registered and charge GST
Rates of GST
o
Almost all supplies are charged at 15%
o
Some supplies are taxed at 0%
(zero-rated supplies), such as:
Exporng goods overseas, selling goods situated overseas, sales of land (
secon 11
)
Exporng services to overseas recipients (
secon 11A
)
The purpose of charging GST at 0% rather than exempng them from GST is to make sure the
registered person can sll claim input tax credits
o
Tax is charged upon the “value of the supply”, as determined in the Act under
secon 10
Calculang the GST component of a price
o
If a DVD costs $23, what is the GST component?
o
Price aſter GST (115%) = price before GST (100%) + GST (15%) = $23
o
The price before GST is therefore a proporon of the price aſter GST, equal to 100%/115%, and GST is a
proporon of the price aſter GST, equal to 15%/115%
Price before GST
=
[
price including GST
]
×
100
115
= $23 x 100/115 = $20
GST
=[
price including GST
]
×
15
115
= $23 x 15/115 = $3
What kind of supplies must have GST charged on them?
o
The GST regime disnguishes between
taxable supplies
,
zero rated supplies
and
exempt supplies
o
Registered persons only charge GST on the taxable supplies
– they do not charge GST on their exempt supplies
or supplies that are deemed to occur outside of New Zealand
GST input tax credits
o
Registered persons are entled to input tax credits – the GST on goods and services purchased or imported to
the extent that they are used for, or available for use in making taxable supplies
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