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September 13, 2021

New Zealand proposes changes to Goods and Services Tax

On 8 September 2021, the New Zealand Government introduced the latest omnibus tax Bill (the Bill) into Parliament. The Bill includes several significant proposed Goods and Services Tax (GST) changes.

This Alert summarizes the GST-related amendments included in the Bill.

GST tax invoice requirements

The proposed changes seek to modernize the GST rules and provide for information in relation to supplies to be created and retained in business' record-keeping systems, removing the current requirements to create and maintain prescribed documents (such as tax invoices and credit notes).

The focus of the changes is on providing flexibility for business in how GST information related to supplies is communicated to customers. Importantly, the changes would remove the need for a tax invoice to be held to support input tax recovery, with entitlement to input tax recovery instead being supported by business records showing the GST that has been borne on the supplies.

GST treatment of cryptoassets

The Bill proposes that cryptoassets should be excluded from the ambit of GST and the financial arrangement rules to ensure these rules do not impose barriers to investing into, or raising capital from, cryptoassets. 

The proposal to remove GST from supplies of cryptoassets is similar to the treatment of money (outside the scope of GST). This has been achieved by specifically defining cryptoassets and by amending the definitions of both “goods” and “services” in the GST Act to expressly exclude cryptoassets. The Bill also proposes that the existing rule enabling input tax recovery on capital raising costs also apply to raising capital through issuing cryptoassets. 

The relevant law changes apply retrospectively from 1 January 2009, to precede the launch of the first cryptocurrency on 3 January 2009.

Domestic freight services

Domestic transportation supplied as part of international transport will be zero-rated. This means that the supplier of domestic transportation no longer needs to be the supplier of international transportation to zero-rate the domestic component. Zero-rating applies regardless of the residency status of the customer.

GST apportionment

The Bill proposes two amendments to the current GST apportionment rules with the intention to reduce compliance costs for GST-registered businesses who carry out both taxable and non-taxable activities.

  • The first proposed amendment amends the current GST apportionment rule allowing a deduction on disposal of an asset to reflect the non-taxable use. The changes enable the input tax deduction to be calculated on the sales price (rather than the purchase price). The introduction of the new rules is to ensure that businesses are not overtaxed on disposal of appreciating assets (e.g., farmhouses, home offices, short-term rental accommodation) which are used for both taxable and non-taxable (exempt or private) purposes.
  • The second proposed amendment allows all GST-registered businesses to adopt an alternative apportionment methodology by applying to Inland Revenue. The amendments are intended to reduce compliance costs for GST-registered businesses who currently have an annual turnover of less than NZ$24 million.

Second-hand input tax credits on supplies between associated persons

Currently a second-hand goods input tax credit is not available between associated persons if there was no GST charged on the original acquisition of the goods, often producing an unfair outcome. The proposed amendment would remove this limitation, so that the second-hand goods input tax credit is limited to the tax fraction (3/23rds) of the original cost of the goods to the supplier.

Clarifying rules for groups of companies

The Bill proposes certain amendments to the GST grouping rules. The proposals clarify how the GST grouping rules should be applied in relation to the other provisions in the Act, particularly consistent with the “wide” interpretation of the GST grouping rules which suggests that supplies/acquisitions by a member of the GST group are deemed to be made/received by the GST group representative. The proposal is an overdue but welcome inclusion and is more likely to assist in achieving the policy objectives of the GST grouping provisions in relation to reducing compliance costs and distortions that might arise between a single entity, a branch structure and a group structure.

Other GST changes of note

Other proposed GST changes include:

  • Allow the Commissioner to approve a registered person to use their accounting cycle as their GST return period, removing the existing seven-day rule.
  • Allow a GST-registered nonresident business to claim input tax deductions for all their GST costs purchased in New Zealand that are used to make supplies outside New Zealand.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Limited (New Zealand), Indirect Tax, Auckland


The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


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