Proposed changes to GST welcomed

OPINION: The Government recently released a discussion document GST: Accounting for land and other high-value assets for public comment, writes Murray McClennan in this week's Taxing Times.

The discussion document is based on an issues paper and submissions that followed.

A summary of the proposals outlined is as follows:

1.Domestic reverse charge: Introduce a domestic reverse charge to transactions involving land, "going concerns" and assets with a value of $50 million or more. (This mechanism would shift the obligation to account for GST from the seller to the buyer.)

2.Strengthening the rules relating to supplies over $225,000 with deferred settlement. The existing rules that are aimed to prevent "timing advantages" would be changed to restrict or defer input claims.

3.Timeframes for releasing refunds: Amend the legislation to specify that the 15 working-day rule refers to the date of issue of the notice by the IRD rather than receipt by the taxpayer.

4.Transactions involving nominations: Clarify the effect of nominations on taxpayers' entitlement to input tax deductions.

5.Sale of property in satisfaction of debt: Extend the rules governing sales in satisfaction of debt to transactions that are "in substance" sales in satisfaction of debt.

6.Input tax entitlements and adjustments for change-in-use: Replace the existing change-in-use adjustment rules with an approach that apportions input tax deductions according to the relative use of the goods and services.

7.Supplies of accommodation: Amend the definitions of "dwelling" and "commercial dwelling" to clarify the boundaries of those definitions.

I believe that most of the proposed changes would simplify GST administration and reduce compliance costs.

» Queenstown-based Murray McClennan is a tax director at WHK Cook Adam Ward Wilson.

- © Fairfax NZ News

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