Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 5-10-2011 Last Replied Date:- 30-12-1899 – Taxation in New Zealand is collected at a national level by the Inland Revenue Department (IRD) on behalf of the Government of New Zealand. National taxes are levied on personal and business income, as well as on the supply of goods and services. Goods and services tax (GST) is an indirect tax introduced in New Zealand on October 1, 1986 at 10%, and later increased to 12.5% on July 1, 1989, and is to be increased to 15% on October 1, 2010. This brought a major change in New Zealand taxation policy as until this point almost all revenue had been raised through direct taxes. Now 19% of the New Zealand Government's core revenue comes from GST. Most products or services sold in New Zealand incur GST at a rate of 12.5%. End-users pay this tax on all liable goods and services directly, in that the purchase price of goods and services includes GST. All businesses are required to register
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d income. Calculate GST by dividing the sales and the income figure by 9. Similarly claim GST @12.5% for purchases and expenses. Calculate GST by dividing the purchases and expenses figure by 9. Taxable goods and services includes: Goods include all types of personal and real property, except money. Services covers everything other than goods or money, e.g. TV repairs, doctor's services and gardening services Taxable goods and services don't include: goods and services supplied by businesses that aren't registered for GST, and exempt supplies such as: rent from Domestic Accommodation. interest you receive donated goods and services sold by a non-profit body, and certain financial services. GST-registered organizations only pay GST on the difference between what they sell and what they buy: income less expenditure. This is accomplished by reconciling GST received through sales and GST paid (through purchases) at regular periods typically every 2 months .H
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e only exceptions are for businesses which claim a mainly wholesale client-base. Otherwise, displaying a prominent GST-exclusive price (i.e. larger and more obvious than the GST-inclusive price), is illegal. Recently, GST increased to 15% in May 2010 budget which is going to be implemented from Oct 1, 2010. As a result, businesses will need to make many critical decisions about issues such as pricing points, updating business systems, GST stipulations in long-term contracts, logistics around repricing consumer goods, and updating promotional material. This new rate will also create challenge for tourism operators who have set their prices up to 2012. The most immediate concern for the majority of SMEs, particularly those selling goods and services directly to consumers, will how much to increase prices. Hence all the businesses including SMEs in New Zealand have to take crucial decisions in dealing with this new tax rate i.e.15% as Oct, 2010 is not so far away. LAWCRUX TEAM – Articles
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