New Zealand Guides On Correcting Overcharged Output GST

new-zealand-guides-on-correcting-overcharged-output-gst

Posted on 10-04-2019

New Zealand’s Inland Revenue has released new goods and services tax guidance for businesses who have incorrectly charged an amount of output tax.

The draft “Question We’ve Been Asked” was released for consultation on October 1. The deadline for feedback is November 12, 2019.

The guidance explains the rules under Section 25 of the Goods and Services Tax Act. It says where the previously agreed consideration is reduced by the amount of the GST incorrectly charged, Section 25 will allow an adjustment only of an amount equal to GST on the amount by which the consideration is reduced.

The GST treatment may be totally reversed only if the amount in question falls within the thresholds in Section 113A of the Tax Administration Act 1994 and providing other conditions are satified.

Section 113A sets out the rules for the correction of minor errors in subsequent returns. Taxpayers will be able to remedy the situation in their following tax return, as explained in the guidance in more detail, if the amount of GST at issue is below the threshold in either Section 113A(1) or Section 113A(4) of the Tax Administration Act, with the maximum cap being NZD10,000. Otherwise a request must be submitted to the tax agency.

New Zealand’s Inland Revenue has released new goods and services tax guidance for businesses who have incorrectly charged an amount of output tax.

The draft “Question We’ve Been Asked” was released for consultation on October 1. The deadline for feedback is November 12, 2019.

The guidance explains the rules under Section 25 of the Goods and Services Tax Act. It says where the previously agreed consideration is reduced by the amount of the GST incorrectly charged, Section 25 will allow an adjustment only of an amount equal to GST on the amount by which the consideration is reduced.

The GST treatment may be totally reversed only if the amount in question falls within the thresholds in Section 113A of the Tax Administration Act 1994 and providing other conditions are satified.

Section 113A sets out the rules for the correction of minor errors in subsequent returns. Taxpayers will be able to remedy the situation in their following tax return, as explained in the guidance in more detail, if the amount of GST at issue is below the threshold in either Section 113A(1) or Section 113A(4) of the Tax Administration Act, with the maximum cap being NZD10,000. Otherwise a request must be submitted to the tax agency.