630 Goods and Seroices Tax Amendment 1986, No. 43

Transcription

1 630 Goods and Seroices Tax Amendment 1986, No. 43 Title I. Short Title and commencement 2. Interpretation 3. Meaning of term "financial services" 4. Meaning of tenn "open market value" 5. Meaning of tenn "supply" 6. Meaning of tenn "taxable activity" 7. Time of supply 8. Value of supply of goods and services 9. Zero rating 10. Imposition of goods and services tax on imports 11. Imposition of goods and services tax on goods liable to excise duty and supplied at "in bond" prices 12. Exempt supplies 13. Taxable penods 14. Taxable period returns 15. Special returns 16. Accounting basis 1 7. Calculation of tax payable 18. Adjustments 19. Tax invoices 20. Credit and debit notes ANALYSIS 1986, No Bad debts 22. Objections to certain decisions 23. Detennination of objection not to affect other assessments or decisions 24. Refund of excess tax 25. Interest on refunds 26. Persons making supplies in course of taxable activity to be registered 27. Cancellation of registration 28. Registered person to notify of change of status 29. Group of companies 30. Unincorporated bodies 31. Agents and auctioneers 32. Offences 33. New Zealand currency 34. Effect of imposition or alteration of tax 35. Deductions for sales tax 36. Supplies prior to 1 October Certain contracts entered into on or before 20 August Alternative method of accounting for transitional supplies 39. Amendment to Rating Act 1967 An Act to amend the Goods and Services Tax Act 1985 [8 August 1986 BE IT ENACTED by the General Assembly of New Zealand in Parliament assembled, and by the authority of the same, as follows: 1. Short Title and commencement-{i) This Act may be cited as the Goods and Services Tax Amendment Act 1986, and shall be read together with and deemed part of the Goods

2 1986, No. 43 Goods and Seruices Tax Amendment 631 and Services Tax Act 1985 (hereinafter referred to as the principal Act). (2) This Act shall be deemed to have come into force on the 3rd day of December Interpretation-(I) Section 2 (1) of the principal Act is hereby amended by adding to the definition of the term "associated persons" the following proviso: "Provided that, for the purposes of this ~ct, any reference to the words '25 percent or more' in section 67 (2) of the Income Tax Act 1976 shall be deemed to be a reference to the words '10 percent or more':". (2) Section 2 (1) of the principal Act is hereby further amended by omitting from paragraph (c) of the definition of the term "commercial dwelling" the word "hospital,". (3) Section 2 (I) of the principal Act is hereby further amended by repealing paralraph (d) of the definition of the term "commercial dwelling', and substituting the following paragraph and words: "(d) Any establishment similar to any of the kinds referred to in paragraphs (a) to (c) of this definition; but does not include a hospital except to the extent that that hospital is a residential establishment:". (4) Section 2 (1) of the principal Act is hereby further amended by adding to the definition of the term "consideration" the words "; but does not include any payment made by any person, otherwise than in the course of making taxable supplies, as an unconditional gift to any non profit body". (5) Section 2 (I) of the principal Act is hereby further amended by adding to the definition of the term "input tax" the following proviso: "Provided that where, in relation to any supply to which paragraph (c) of this definition applies, the supplier and recipient are associated persons, the consideration in money for that supply shall, for the purposes of this definition, be deemed to be the lesser of the purchase price or the open market value of that supply:". (6) Section 2 (1) of the principal Act is hereby further amended by repealing the proviso to the definition of the term "resident", and substituting the following proviso: "Provided that, notwithstanding anything in that section,-

3 632 Goods and Services Tax Amendment 1986, No. 43 "(a) A person shall be deemed to be resident in New Zealand to the extent that that person carries on, in New Zealand, any taxable activity or any other activity, while having any fixed or permanent place in New Zealand relating to that taxable activity or other activity: "(b) A person who is an unincorporated body of persons, or is otherwise a body (as defined in section 57 of this Act), shall be deemed to be resident in New Zealand if that body has its centre of administrative management in New Zealand:",. (7) Section 2 (I) of the principal Act is hereby further amended by inserting in the definition of the term "secondhand goods", after the words "by any other person", the words ", but does not include any fine metal or any goods which are, or to the extent to which they are manufactured or made from, gold, silver, platinum, or any other substance which, if it were of the required fineness, would be fine metal". (8) Section 2 (1) of the principal Act is hereby further amended by adding to the definition of the term "tax payable" the following paragraph: "(c) Any amount of tax refundable by the Commissioner pursuant to section 19 or section 20 of this Act:". (9) Section 2 (1) of the principal Act is hereby further amended by inserting, in their appropriate alphabetical order, the following definitions: " 'Dealer in fine metal' means any person who satisfies the Commissioner that a principal part of that person's business is the regular purchase and supply, for use as an investment item, of any fine metal: " 'Fine metal' means- "(a) Gold, in any form, being gold of a fineness of not less than 99.5%: "(b) Silver, in any form, being silver of a fineness of not less than 99.9%: "(c) Platinum, in any form, being platinum of a fineness of not less than 99.0%: "(d) Any other substance that the Governor General may, from time to time, by Order in Council, declare to be fine metal for the purposes of this definition:

4 1986, No. 43 Gooru and Seroices Tax Amendment 633 " 'Hospital' means- "(a) Any hospital or other institution having the principal purpose of the reception and treatment of persons requiring medical treatment or suffering from any disease; or "(b) Any maternity hospital; or "(c) Any private hospital or licensed hospital within the meaning of Part V of the Hospitals Act 1957; or "(d) Any hospital within the meaning of the Mental Health Act 1969;- and includes all clinics, dispensaries, outpatient departments, services, offices, and undertakings maintained in connection with or incidental to any such hospital or institution: " 'New fine metal' means any fine metal which has been refined into fine metal by a refiner of fine metal: " 'Refiner of fine metal' means any person who satisfies the Commissioner that, in the regular course of business, that person converts or refines any fine metal: "'Residential establishment' means any commercial dwelling in which not less than 70 percent of the individuals to whom domestic goods and services are supplied reside, or are expected to reside, for a period of, or in excess of, 4 weeks; and also includes any hospital to the extent that it is used to provide domestic goods and services in a way similar to any such residential establishment: " 'Unconditional gift' means a payment voluntarily made to any non profit body for the carrying on or carrying out of the rurposes of that non profit body and in respect 0 which no identifiable direct valuable benefit arises or may arise in the form of a supply of goods and services to the person making that payment, or any other person where that person and that other person are associated persons:". 3. Meaning of term "financial services"-(i) Section 3 (1) of the principal Act is hereby amended by inserting, after paragraph (k), the following paragraph: "(ka) The payment or collection of any amount of interest, principal, dividend, or other amount whatever in respect of any debt security, equity security, participatory security, credit contract,

5 634 Goods and Seruices Tax Amendment 1986, No. 43 contract of life insurance, superannuation scheme, or futures contract:". (2) Section 3 (1) (l) of the principal Act is hereby further amended by omitting the expression "(k)", and substituting the expression "(ka)". 4. Meaning of term "open market value"-section 4 (1) of the principal Act is hereby amended by repealing paragraph (b), and substituting the following paragraph: "(b) The open market value of a supply shall include any goods and services tax charged pursuant to section 8 (1) of this Act on that supply." 5. Meaning of term "supply"-(1) Section 5 of the principal Act is hereby amended by inserting, after subsection (6), the following subsections: "(6A) For the purposes of this Act, any registration fee paid pursuant to section 7 (3) of the Transport (Vehicle and Driver Registration and Licensing) Act 1986 (and prescribed in Part I of the Second Schedule to that Act), and any annual licence fee paid pursuant to section 10 (2) of that Act (and prescribed in Part 11 of the Second Schedule to that Act), shall be deemed to be consideration for a supply of services by the Post Office in the course or furtherance of a taxable activity. "(68) For the purposes of this Act, any amount of road user charge paid on or after the 1 st day of December 1986 pursuant to section 9 of the Road User Charges Act 1977 shall be deemed to be consideration for a supply of services by the National Roads Fund (as constituted and defined in the National Roads Act 1953) in the course or furtherance of a taxable activity, and that supply shall be deemed to take place when and to the extent that any payment of road user charge is made to that Fund pursuant to section 22 (1) of the Road User Charges Act 1977." (2) Section 5 (7) of the principal Act is hereby amended by repealing paragraph (a), and substituting the following paragraph: "(a) Every local authority is deemed to supply goods and services to any person where any amount of rates is payable by that person to that local authority: "Provided that this paragraph shall not apply to any amount deemed to be rates under any of sections 384, 463, 466, 514, 533, 644E, 674, and 675 of the Local Government Act 1974, except to the extent that that amount is payable to that local

6 1986, No. 43 Goods and Services Tax Amendment 635 authority in respect of any supply of goods and services by that local authority, not being a supply of goods and services deemed to be made pursuant to this paragraph." (3) Section 5 of the principal Act is hereby further amended by inserting, after subsection (1), the following subsection: "(1 la) Notwithstanding anything in this Act, where any registered person applies any stamp or special stamp (as defined in the Post Office Act 1959) on or in conjunction with any postal note (as defined in the Post Office Act 1959) as consideration for, or part of the consideration for, any taxable supply of goods and services, that application shall be deemed to be a taxable supply made by that registered person, for a consideration in money equal to the purchase price, including tax, of that stamp or special stamp, at the time that that stamp or special stamp is so applied." (4) Section 5 (3) of the principal Act is hereby amended by inserting, after the words "supply of services", the words "performed on the day of receipt of that indemnity payment". (5) Section 5 (13) of the principal Act is hereby further amended by adding the following proviso: "Provided that this subsection shall not apply in respect of any indemnity payment received pursuant to a contract of insurance where the supply of that contract of insurance is not a supply charged with tax pursuant to section 8 (1) of this Act." (6) Section 5 of the principal Act is hereby further amended by inserting, after subsection (13), the following subsection: "03A) For the purposes of this Act, except for section 20 (3) of this Act, where a registered person receives any refund of excise duty to which section 20 (3) (da) of this Act refers, that refund shall, to the extent that it relates to excise duty incurred for the principal purpose of making taxable supplies, be deemed to be consideration received for a supply of services by that registered person in the course or furtherance of that person's taxable activity." 6. Meaning of tenn "taxable activity"-section 6 (1) (b) of the principal Act is hereby amended by inserting, before the words "The activities", the words "Without limiting the generality of paragraph (a) of this subsection,". 7. Time of supply-m Section 9 (2) of the principal Act is hereby amended by repealing paragraph (d), and substituting the following paragraph:

7 636 Goods and Services Tax Amendment 1986, No. 43 "(d) Where that supply is deemed to be made pursuant to section 5 (8) of this Act, when and to the extent that the amount of the money is dealt with as specified in that section:". (2) Section 9 (3) (a) of the principal Act is hereby amended (a) By inserting, after the words "any agreement", the words "or enactment": (b) By inserting, after the words "the agreement", the words "or the enactment". (3) Section 9 (3) of the principal Act is hereby further amended by inserting, after paragraph (a), the following paragraph: "(aa) Where and to the extent that- "(i) Goods are supplied progressively or periodically pursuant to any agreement or enactment which provides for the consideration for that supply to be paid in instalments or periodically and in relation to the periodic or progressive supply of those goods; or "(ii) Goods and services supplied directly in the construction, major reconstruction, manufacture, or extension of a building or a civil engineering work are supplied pursuant to any agreement or enactment which provides for the consideration for that supply to become due and payable in instalments or periodically in relation to the progressive nature of that construction, manufacture, or extensionthose goods and services shall be deemed to be successively supplied, and each such successive supply shall be deemed to take place whenever any payment in respect of that supply becomes due, is received, or any invoice relating only to that payment is issued, whichever is the earlier:". (4) Section 9 (3) of the principal Act is hereby further amended- (a) By inserting in paragraph (b), after the words "Where goods", the words' and services": (b) By inserting in paragraph (c) (i), after the words "to the bailee", the words ' or which expressly contemplates that the property in the goods will pass to the bailee". (5) Section 9 of the principal Act is hereby further amended by repealing subsections (4) and (5).

8 1986, No. 43 Goods and Services Tax Amendment Value of supply of goods and services-(l} Section 10 (2) (b) of the principal Act is hereby amended by omitting the words "together with any tax charged in respect of that supply". (2) Section 10 (3) of the principal Act is hereby amended by omittin? the words "value of the supply", and substituting the words ' consideration in money for the supply". (3) Section 10 (3) of the principal Act is hereby further amended by adding the following proviso: "Provided that this subsection shall not apply to any supply, being a fringe benefit which that registered person has, or is deemed to have, provided or granted pursuant to Part XB of the Income Tax Act 1976 to the recipient, being a person employed under a contract of service by that registered person." (4) Section 10 of the principal Act is hereby further amended by repealing subsection (4), and substituting the following subsection: "(4) Where any supply of goods is a supply which would, but for the proviso to section 11 (1) of this Act, be charged with tax at the rate of zero percent, the consideration in money for that supply shall be deemed to be an amount equal to the purchase price of those goods to the supplier: "Provided that in any case where the deduction of input tax referred to in that proviso has been made by any other person (where that supplier and that other person are associated persons), the consideration in money for that supply shall be deemed to be an amount equal to the greater of the purchase price of those goods to that supplier and the purchase price of those goods to that other person: "Provided further that for the purposes of this subsection, the purchase price of any goods shall not be reduced by any amount of input tax deducted by the supplier or, as the case may be, any other person where the supplier and that other person are associated persons, pursuant to section 20 (3) of this Act." (5) Section 10 (5) of the principal Act is hereby amended (a) By omitting the words "goods and services are supplied", and substituting the words "any taxable supply of goods and services is made": (b) By omitting the words "disclosed in the credit contract", and substituting the words "(as defined in the Credit Contracts Act 1981) in relation to that supply".

9 638 Goods and Services Tax Amendment 1986, No. 43 (6) Section 10 of the principal Act is hereby further amended by repealing subsection (6), and substituting the following subsection: "(6) Where and to the extent that any supply of goods and services consists of the supply, to any individual, of domestic goods and services in a commercial dwelling, the value attributable to that part of that supply of domestic goods and services that is for a period in excess of 4 weeks shall be deemed to be reduced to an amount equal to 60 percent of the amount that would, if that part of that supply were chargeable with tax at the rate of 6 percent, be the value of that part of that supply of domestic goods and services: "Provided that to the extent that any supply is a supply of domestic goods and services, and where that commercial dwelling is a residential establishment, and where the supplier and the recipient have agreed that that supply shall be for a period of or in excess of 4 weeks, or for a number of periods which in the aggregate will exceed 4 weeks, the value attributable to that supply of domestic goods and services shall, from the commencement of that supply, be deemed to be reduced to an amount equal to 60 percent of the amount that would, if that supply were chargeable with tax at the rate of 6 percent, be the value of that supply of domestic goods and services. " (7) Section 10 (8) of the principal Act is hereby amended (a) By omitting the words "the value of', and substituting the words "the consideration in money for": (b) By omitting the words "excluding the tax charged", and substituting the words "including any tax charged in respect of the supply of those goods and services to that supplier". (8) Section 10 (14) of the principal Act is hereby amended by omitting the words "of the sale of the tickets after deducting the amount of all prizes paid and payable in money", and substituting the words "(after deducting the amount of all prizes paid and payable in money)". (9) Section 10 (15) of the principal Act is hereby amended by omitting the words "'prize competition', and 'ticket' ", and substituting the words 'and 'prize competition' ". 9. Zero-rating-(I) Section 11 (l) (a) of the principal Act is hereby amended by inserting, after sub paragraph (i), the following subparagraph:

10 1986, No. 43 Goods and Services Tax Amendment 639 "(ia) Has satisfied the Commissioner that the goods have been exported to a country or place outside New Zealand; or". (2) Section 11 (l)(a) of the principal Act is hereby further amended by inserting in the proviso, after the words "time of supply", the words "or, where circumstances beyond the control of the supplier and recipient prevent the exportation of those goods within 28 days of the time of sup,ply, such longer period as the Commissioner may determine '. (3) Section 11 (1) of the principal Act is hereby further amended by adding the following paragraph: "(ca) The supply is the supply of new fine metal (being the first supply of that new fine metal following its refining) by the refiner of that fine metal to a dealer in fine metal, for the purposes of the supply of that fine metal for use as an investment item: "Provided that where any person is a refiner of fine metal and is also a dealer in fine metal, that new fine metal shall, for the purposes of this paragraph, be deemed to have been supplied to a dealer in fine metal at a time immediately prior to the making of any exempt supply of that new fine metal; or". (4) Section 11 (I) of the principal Act is hereby further amended by repealing the proviso, and substituting the following proviso: "Provided that paragraphs (a) and (b) of this subsection shall not apply in respect of any supply of goods by a registered person,- "(d) Being goods in respect of which input tax specified in paragraph (cl of the definition of 'input tax' in section 2 of this Act has been deducted by that registered person, or any other person where that registered person and that other person are associated persons, pursuant to section 20 (3) of this Act: "(e) Being goods which have been or will be reimported to New Zealand by the supplier." (5) Section 11 (2) of the principal Act is hereby amended by repealing paragraph (a), and substituting the following paragraph: "(a) The services are supplied directly in connection with the transportation, or the arranging thereof, of passengers or goods, either to New Zealand from

11 640 Goods and Services Tax Amendment 1986, No. 43 any country or place outside New Zealand, or from New Zealand to any country or place outside New Zealand, not including any services to the extent that those services involve transportation from a place within New Zealand to another place within New Zealand, and not including any services that are ancillary transport activities such as loading, unloading, and handling: "Provided that this paragraph shall also apply to services supplied directly in connection with the transportation, or the arranging thereof, of passengers or goods within New Zealand, including ancillary transport activities such as loading, unloading, and handling, where and to the extent that those services are supplied by the same supplier as part of the supply of services to which this paragraph would, but for this proviso, apply: "Provided also that this paragraph shall apply to any service which is the insuring, or the arranging thereof, of the transportation of passengers or goods to which this paragraph applies or of any such passenger in relation to any such transportation:". (6) Section 11 (2) (c) (i) of the principal Act is hereby amended by omitting the word "supplied", and substituting the word "performed". (7) Section 11 (2) of the principal Act is hereby further amended by repealing paragraph (e), and substituting the following paragraph: "(e) The services are supplied for and to a person who is not resident in New Zealand and who is outside New Zealand at the time the services are performed, not being services which are supplied directly in connection with- "(i) Land or any improvement thereto situated inside New Zealand; or "(ii) Movable personal property situated inside New Zealand at the time the services are performed, not being goods referred to in paragraph (c) (ii) of this section;- and not being services which are the acceptance of an obligation to refrain from carrying on any taxable activity, to the extent that the conduct of

12 1986, No. 43 Goods and Services Tax Amendment 641 that taxable activity would have occurred within New Zealand; or". (8) Section 11 of the principal Act is hereby further amended by adding the following subsection: "(3) Where, but for this section, a supply of goods and services would be charged with tax under section 8 of this Act, any such supply shall be charged at the rate of zero percent where the supplier is the National Roads Fund (as constituted and defined in the National Roads Act 1953) and the consideration for that supply is credited to that Fund pursuant to section 188 (2) (d) of the Transport Act 1962 or is paid to that Fund pursuant to section 22 (1) of the Road User Charges Act 1977." (9) Subsection (8) of this section and subsection (3) of section 11 of the principal Act (as substituted by the said subsection (8)) shall be deemed to have been repealed on the 1 st day of December 1986, and for subsection (3) of section 11 of the principal Act there shall then be substituted the following subsection: "(3) Where, but for this section, a supply of goods and services would be charged with tax under section 8 of this Act, any such supply shall be charged at the rate of zero percent where the supplier is the National Roads Fund (as constituted and defined in the National Roads Act 1953) and the consideration for that supply is credited to that Flmd pursuant to section 188 (2) (d) of the Transport Act 1962.". (10) Section 11 of the principal Act is hereby further amended by adding the following subsections: "(4) Where, but for this section, a supply of goods and services would be charged with tax under section 8 of this Act, any such supply shall be charged with tax at the rate of zero percent where the supplier is a territorial authority, regional council, or united council and the consideration for that supply is proceeds from the local authorities petroleum tax paid to that supplier under section 198 of the Local Government Act "(5) For the purposes of subsection (4) of this section,- "(a) The terms 'territorial authority', 'regional council', and 'united council' have the same meanings as defined in section 2 of the Local Government Act 1974: "(b) 'Local authorities petroleum tax' is local authorities petroleum tax levied in accordance with Part XI of the Local Government Act 1974.".

13 642 Goods and Services Tax Amendment 1986, No Imposition of goods and services tax on importsm Section 12 (I) of the principal Act is hereby amended by inserting, after the words "importation of goods", the words "(not being goods the supply of which is exempt from tax pursuant to section 14 of this Act)". (2) Section 12 (1) of the principal Act is hereby amended by inserting, after paragraph (a), the following paragraph: "(aa) Entered for delivery to a manufacturing area under the Customs Act 1966; or". (3) Section 12 m (b) of the principal Act is hereby amended by inserting after the word "consumption", the words "or, as the case may be, entry for delivery to a manufacturing area under the Customs Act 1966,". (4) Section 12 (2) of the principal Act is hereby amended by repealing paragraph (d). (5) Section 12 (4) (a) of the principal Act is hereby amended- (a) By omitting the words "(except for sections 117, 11 7 A, 1178, and 118)": (b) By inserting, before the expression "153", the expression " 152A,": (c) By omitting the expression "164". (6) Section 12 (4) of the principal Act is hereby further amended by inserting, after paragraph (a), the following paragraph: "(aa) Section 164: "Provided that this paragraph shall only apply in respect of goods that have been owned and used by any person outside New Zealand, and are not goods imported for the purpose of carrying on any taxable activity; and". 11. Imposition of goods and services tax on goods liable to excise duty and supplied at "in bond" prices-section 13 of the principal Act is hereby amended by omitting the expression "section 134" wherever it appears, and substituting in each case the expression "Part IV A". 12. Exempt supplies-m Section 14 of the principal Act is hereby amended by inserting, after paragraph (c), the following paragraph: "(ca) The supply of leasehold land by way of rental (not being a grant or sale of the lease of that land) to the extent that that land is used for the principal

14 1986, No. 43 Goods and Services Tax Amendment 643 purpose of accommodation in a dwelling erected on that land:". (2) Section 14 of the principal Act is hereby amended by inserting, in paragraph (d), after the words "The supply", the words ", being a sale,". (3) Section (I 4) of the principal Act is hereby further amended by adding the following paragraph: "(e) The supply of any fine metal, not being a supply which, but for this paragraph, would be charged with tax at the rate of zero percent pursuant to section 11 (1) of this Act." 18. Taxable periods-the principal Act is hereby amended by repealing section 15, and substituting the following section: "15. (1) Subject to this section, the Commissioner shall, in respect of the registration of every person under this Act, not being a registered person who is determined by the Commissioner to be in category C or category D, determine whether the registered person is in category A or in category B so as to achieve an approximately equivalent number of persons in each category, and- "(a) Where -the registered person is in category A, that person's taxable periods for the purposes of this Act shall be the periods of 2 months ending with the last day of January, March, May, July, September, and November in any year: "(b) Where the registered person is in category B, that person's taxable periods for the purposes of this Act shall be the periods of 2 months ending with the last day of February, April, June, August, October, and December in any year: "Provided that the Commissioner may, from time to time, "(i) On application in writing by a registered person; or "(ii) If the Commissioner so determines,- direct that that registered person change from being in category A to category B or, as the case may be, from being in category B to category A with effect from the commencement of the taxable period immediately following the taxable period during which that direction is made by the Commissioner.

15 644 Goods and Service.! Tax Amendment 1986, No. 43 "(2) Notwithstanding subsection (1) of this section, where, in relation to any registered person,- "(a) At the end of any month, the total value of that person's taxable supplies in the Jeriod of 12 months then ending has not exceede $250,000 (or such greater amount as the Governor General may, from time to time, by Order in Council, declare); or "(b) If in the period of 12 months beginning on the first day of any month, the total value of that person's taxable supplies is not likely to exceed that amount,- the Commissioner may, on application in writing by that registered person, determine that person to be in category C, and that person's taxable periods shall, for the purposes of this Act, be deemed to be periods of 6 months with effect from such date, being the last day of any month in any year, as may be determined by the Commissioner. "(3) Notwithstanding anything in subsection (1) or subsection (2) of this section, any registered person may at any time, on application in writing to the Commissioner, request that that registered person be placed in category D, and the Commissioner shall determine accordingly, and for the purposes of this Act that person's taxable periods shall be deemed to be periods of one month with effect from such date, being the last day of any month in any year, as may be determined by the Commissioner. "(4) Notwithstanding anything in subsection (1) or subsection (2) or subsection (3) of this section, upon written application of a registered person, the Commissioner may determine a day in substitution for the last day mentioned in paragraph (a) or paragraph (b) of subsection (I) or subsection (2) or subsection 3) of this section, not being in any case a day earlier than 7 days prior to that last day, or a day later than 7 days following that last day, but any such determination shall, for the purposes of section 16 (1) of this Act, be disregarded. "(5) Where the Commissioner has- "(a) Pursuant to subsection (2) of this section, determined a registered person to be in category C, and that registered person has ceased to satisfy the conditions of subsection (2) of this section under which any such determination may be made, and- "(i) That registered person notifies the Commissioner of that cessation pursuant to section 53 (c) of this Act; or

16 1986, No. 43 Goods and Services Tax Amendment 645 "(ii) The Commissioner is otherwise satisfied of that cessation; or "(b) Pursuant to subsection (2) or subsection (3) of this section, determined a registered person to be in category C or, as the case may be, category D, and that registered person has made an application in writing to the Commissioner to change that person's category,- the Commissioner shall determine that that registered person be in category A, category B, category C, or category D, as the case may be, with effect from the day following the end of the taxable period during which that determination is made by the Commissioner, or such earlier day as the Commissioner may, with the agreement of that registered person, determine: "Provided that any such registered person shall not cease to satisfy the conditions of subsection (2) of this section where the total value of that registered person's taxable supplies has exceeded, or, as the case may be, will exceed the amount specified for the purposes of the said subsection (2) solely as a consequence of- "(c) Any cessation of, or any substantial and permanent reduction in the size or scale of, any taxable activity carried on by that registered person; or "(d) The replacement of any plant or other capital asset used in any taxable activity carried on by that registered person. "(6) Where a registered person changes from one category to another category, the first return after the change shall not include any period in respect of which that person has previously furnished a return. "(7) Where the Commissioner has not made a determination pursuant to subsection (1) or subsection (2) or subsection (3) of this section in respect of any registered person, that person shall be deemed to be in category A." 14. Taxable period returns-(i) Section 16 (1) of the principal Act is hereby amended by inserting in the proviso, after the words "the circumstances of', the words "any nonprofit body or". (2) Section 16 (I) of the principal Act is hereby further amended by adding the following additional proviso: "Provided further that where any return would be due, pursuant to this section, on the 1st day of January in any year,

17 646 Goods and Services Tax Amendment 1986, No. 43 that return shall be deemed to be required to be furnished on the 15th day of January in that year." 15. Special returns-(l) Section 17 m (ay of the principal Act is hereby amended by insertin~, after the words "furnish to the Commissioner", the words' in the prescribed form". (2) Section 17 m (a) is hereby further amended by repealing subparagraph (vi), and substituting the following subparagraph: "(vi) Such other particulars as may be prescribed; and". 16. Accounting basis-(l) Section 19 (2) (b) of the principal Act is hereby amended by omitting the expression "$250,000", and substituting the expression "$500,000". (2) Section 19 (2) (c) of the principal Act is hereby further amended by omitting the word "or", and substituting the word "and". 17. Calculation of tax payable-m Section 20 (2) of the principal Act is hereby amended by inserting in paragraph (a), after the word "Act", the words "and is held by the registered person making that deduction at the time that any return in respect of that supply is furnished". (2) Section 20 (2) (b) of the principal Act is hereby amended by omitting the words "section 25 of this Act:", and substituting the words "section 25 of this Act; or". (3) Section 20 (2) of the principal Act is hereby further amended by adding, after paragraph (b), the following paragraph: "(c) Sufficient records are maintained as required pursuant to section 24 (7) of this Act where the supply is a supply of secondhand goods to which that section relates:". (4) Section 20 (3) (a) (ii) of the principal Act is hereby amended- (a) By omitting the word "Paid", and substituting the words "Invoiced or paid, whichever is the earlier,": (b) By omitting the words "taxable period; and", and substituting the words "taxable period:". (5) Section 20 (3) (a) of the principal Act is hereby amended by adding the following subparagraph: "(iii) Calculated in accordance with section 25 (2) (b) or section 25 (5) or section 26 of this Act; and".

18 1986, No. 43 Goods and Seroice.s Tax Amendment 647 (6) Section 20 (3) (b) (i) of the principal Act is hereby amended by inserting, after the expression "section 9 (3) (a)", the words "or section 9 (3) (aa)". (7) Section 20 (3) (b) (iii) of the principal Act is hereby amended by omitting the words "applies; and", and substituting the word "applies:". (8) Section 20 (3) (b) of the principal Act is hereby amended by adding the following subparagraph: "(iv) Calculated in accordance with section 25 (2) (b) or section 25 (5) of this Act, to the extent that a payment has been made in respect of that amount, or section 26 of this Act; and'. (9) Section 20 (3) of the principal Act is hereby further amended- (a) By repealing paragraph (c): (b) By inserting, in paragraph (d) (i), after the words "a taxable supply", the words ", or where the supply of that contract of insurance would have been a taxable supply if the time of performance of that supply had been on or after the 1st day of October 1986". (l0) Section 20 (3) (d) of the principal Act is hereby further amended by adding to the proviso the following subparagraphs: "(iii) Shall not apply where the supply of that contract of insurance is a supply charged with tax at the rate of zero percent pursuant to section 11 of this Act and that other person is, at the time that that payment is made, not a registered person and not resident in New Zealand: "(iv) Shall not apply where that payment results from a supply of goods and services to that other person where those goods are situated outside New Zealand or those services are physically performed outside New Zealand at the time of that supply:". (11) Section 20 (3) of the principal Act is hereby further amended by inserting, after paragraph (d), the following paragraph: "(da) Where the registered person is the National Roads Fund (as constituted and defined in the National Roads Act 1953), an amount equal to the tax fraction of any refund of excise duty paid out of that Fund on or after the 1st day of October 1986 pursuant to section 189 of the Transport Act 1962."

19 648 Goods and Seroices Tax Amendment 1986, No. 43 (12) Section 20 (3) of the principal Act is hereby further amended by adding the following provisos: "Provided also that input tax specified in paragraph (c) of the definition of 'input tax' in section 2 of this Act shall not be deducted pursuant to this subsection in respect of the supply of any secondhand goods to that registered person on or after the 1st day of October 1986 and on or before the 30th day of June 1987 where those goods were supplied by that registered person on or after the 1st day of July 1986 and on or before the 30th day of September 1986: "Provided further that, in respect of any input tax to which the second proviso to this subsection refers, where that registered person satisfies the Commissioner- "(a) That each supply referred to in that proviso has been made to and by that registered person in the normal course of the taxable activity carried on by that registered person; and "(b) That each such supply has been made to and by that registered person otherwise than for the purpose of enabling that registered person to claim a deduction of that input taxthe second proviso to this subsection shall not apply. (13) Section 20 (4)(b) (i) of the principal Act is hereby amended by omitting the words "or section 9 (4) or section 9 (6)", and substituting the words "or section 9 (3) (aa) or section 9 (6) or section 25 (2) (a) or section 25 (4)". 18. Adjustments-(I) Section 21 (1) of the principal Act is hereby amended by omitting the words "in the course of a taxable activity", and substituting the words "for the principal purpose of making taxable supplies". (2) The proviso to section 21 (I) of the principal Act is hereby amended- (a) By inserting, after the words "will not exceed", the words "the lesser of": (b) By omitting from paragraph (a) the expression "$48,000; and", and substituting the expression "$48,000:". (3) Section 21 (1) of the principal Act is hereby further amended by adding the following proviso: "Provided further that where this subsection afplies to any goods, being goods forming part of the capita assets of a taxable activity and having a cost of less than $10,000, that registered person may, for the purposes of the return to be furnished in respect of the taxable period during which those

20 1986, No. 43 Goods and Services Tax Amendment 649 goods were acquired or produced, make an assessment in accordance with a method approved by the Commissioner, of the extent to which those goods are to be applied for a purpose other than that of making taxable supplies, and that registered person shall be deemed to make a supply of those goods, to that extent, in that return period and not in any later return period." (4) Section 21 of the principal Act is hereby further amended by inserting, after subsection (1), the following subsection: "(la) For the purposes of the first proviso to subsection (1) of this section, in determining the total value of all exempt supplies to be made in any 12-month period by a registered person (where that person is required to account for tax payable on a payments basis pursuant to section 19 of this Act), an exempt supply shall be deemed to take place during that period- "(a) To the extent that payment is expected to be received during that period in respect of that sufply, being a supply of goods and services which, i that supply were a supply charged with tax pursuant to section 8 of this Act, would be deemed to take place pursuant to section 9 (1) or section 9 (3) (a) or section 9 (3) (aa) or section 9 (6) or section 25 (2) (a) or section 25 (4) of this Act; or "(b) Where the supply of goods and services would be made or deemed to be made during that period by that person if that supply were a supply charged with tax pursuant to section 8 of this Act, not being a supply to which paragraph (a) of this subsection applies." (5) Section 21 (3) of the principal Act is hereby amended by adding the following proviso: "Provided further that this subsection shall not apply to any fringe benefit to the extent that it is provided or granted by that registered person in the course of making exempt supplies. " (6) Section 21 (5) of the principal Act is hereby amended (a) By omitting the words "that person for the principal purpose", and substituting the words "that person or, where that person is a member of a partnership (as defined in section 5 7 of this Act), by that partnership for the purpose": (b) By omitting the words "in that taxable period to that registered person", and substituting the words "in

21 650 Goods and Services Tax Amendment 1986, No. 43 that taxable period to that person or, as the case may be, that partnership": (c) By inserting, after the words "allow that person", the words "or, as the case may be, that partnership,". (7) Section 21 (5) of the principal Act is hereby further amended by adding the following further proviso: "Provided further that where this subsection applies to any goods, being capital assets having a cost of less than $10,000, that registered person or, as the case may be, that partnership may, for the purposes of the return to be furnished in respect of the taxable period during which those goods were acquired or produced, make an assessment in accordance with a method approved by the Commissioner, of the extent to which those goods are to be applied for the purpose of making taxable supplies, and that registered person or, as the case may be, that partnership shall be deemed to have acquired those goods for the purpose of making taxable supplies, to that extent, in that return period and not in any later return period." 19. Tax invoices-(l} Section 24 (3) of the principal Act is hereby amended- (a) By omitting from paragraph (b) the word ", address,": (b) By omitting from paragraph (d) the words "An individual serialised number and". (2) Section 24 (6) of the principal Act is hereby amended by inserting, after the words "may determine that", the words ", subject to any conditions that the Commissioner may consider necessary,". (3) Section 24 (7) of the principal Act is hereby amended by omitting the words "supplier, not being a registered person, makes a supply", and substituting the words "supplier makes a supply, not being a taxable supply,". (4) Section 24 (7) of the principal Act is hereby further amended by adding the following proviso: "Provided that this subsection shall not require that recipient to keep such records where the consideration in money for that supply does not exceed $20 (or such greater amount as the Governor-General may, from time to time, by Order in Council declare}." (5) Section 24 of the principal Act is hereby amended by adding the following subsection: "(8) Where any amount of tax charged is required to be shown on any tax invoice, and that amount consists of any

22 1986, No. 43 Goorh and Services Tax Amendment 651 number of dollars and cents together with any fraction or part of a cent, that fraction or part of that cent,- "(a) If less than or equal to half of that cent, may be disregarded for the purposes of this section: "(b) If in excess of half of that cent, shall be deemed for the purposes of this section to be an amount equal to one cent." 20. Credit and debit notes-(l) Section 25 (1) of the principal Act is hereby amended by inserting, after paragraph (a), the following paragraph: "(aa) The nature of that supply of goods and services has been fundamentally varied or altered; or". (2) Section 25 (2) (b) of the principal Act is hereby amended by inserting, after the words "shall make a deduction", the words "of input tax". (3) Section 25 (3) (a) of the principal Act is hereby amended by repealing sub paragraphs (v) and (vi), and substituting the following subparagraph: "(v) Either- "(A) The amount of consideration for that supply contained in the tax invoice referred to above, the correct amount of consideration for the supply, the difference between those 2 amounts, and the tax charged in respect of that supply to the extent that it relates to the amount of that difference; or "(B) Where the tax charged in respect of the supply is the tax fraction of the consideration, the difference referred to above in this subparagraph and a statement that that difference includes a charge in respect of the tax." (4) Section 25 (3) (b) of the principal Act is hereby further amended by omitting subparagraphs (v) and (vi), and substituting the following subparagraph: "(v) Either- "(A) The amount of consideration for that supply contained in the tax invoice referred to above, the correct amount of consideration for the supply, the difference between those 2 amounts, and the tax charged in respect of that supply

23 652 Goods and Seroices Tax Amendment 1986, No. 43 to the extent that it relates to the amount of that difference; or "(B) Where the tax charged in respect of the supply is the tax fraction of the consideration, the difference referred to above in this subparagraph and a statement that that difference includes a charge in respect of the tax." (5) Section 25 (3) of the principal Act is hereby further amended by inserting in paragraphs (c) and (d), in each case after the words "credit note", the words "or debit note". (6) Section 25 (3) (e) of the principal Act is hereby amended by adding the words "and that the terms of the prompt payment discount offer are clearly stated on the face of the tax..,' mvolce. (7) Section 25 of the principal Act is hereby amended by inserting, after subsection (3), the following subsections: "(3A) Where a recipient, being a registered person, creates a document containing the particulars specifieil in this section and purporting to be a credit note or a debit note in respect of a supply of goods and services made to the recipient by a supplier, being a registered person, that document shall be deemed to be a credit note or, as the case may be, a debit note provided by the supplier under subsection (3) of this section where- "(a) The Commissioner has granted prior approval for the issue of such documents by a recipient or class or classes of recipients in relation to the supplies or class or classes of supplies to which the documents relate; and "(b) The sup flier and the recipient agree that the supplier shal not issue a credit note or, as the case may be, a debit note in respect of any supply to which this subsection applies; and "(c) A copy of any such document is provided to the supplier and another copy is retained by the recipient: "Provided that- "(d) Where a credit note is issued pursuant to this subsection, any credit note issued by the supplier in respect of that supply shall be deemed not to be a credit note for the purposes of this Act: "(e) Where a debit note is issued pursuant to this subsection, any debit note issued by the supplier in respect of

24 1986, No. 43 Goods and Seroices Tax Amendment 653 that supply shall be deemed not to be a debit note for the purposes of this Act. "(3B) Where the Commissioner is satisfied that there are or will be sufficient records available to establish the particulars of any supply or class of supplies, and that it would be impractical to require that a credit note or a debit note be issued pursuant to this section, the Commissioner may determine that, subject to any conditions that the Commissioner may consider necessary,- "(a) Anyone or more of the particulars specified in paragraph (a) or, as the case may be, paragraph (b) of subsection (3) of this section shall not be contained in a credit note or, as the case may be, a debit note; or "(b) A credit note or, as the case may be, a debit note is not required to be issued." (8) Section 25 of the principal Act is hereby further amended by repealing subsection (4), and substituting the following subsection: "(4) Where any recipient, being a registered person, has been issued with a credit note pursuant to subsection (3) (a) of this section, or has written or other notice or otherwise knows that any tax invoice which that registered person holds is incorrect as a result of anyone or more of the events specified in any of paragraphs (a), (aa), (b), and (c) of subsection (1) of this section, and has made a deduction of any amount of input tax in any taxable period in respect of that supply of goods and services to which the credit note or that notice or other knowledge, as the case may be, relates, the amount of the excess referred to in subsection (3) (a) of this section shall be deemed to be tax charged in relation to a taxable supply made by the recipient attributable to the taxable period in which the credit note was issued, or that notice or, as the case may be, other knowledge was received, to the extent that the input tax deducted exceeds the output tax properly charged." (9) Section 25 (5) of the principal Act is hereby amended by omitting the words "pursuant to section 20 (3) (c)", and substituting the words "of input tax pursuant to section 20 (3)". (10) Section 25 of the principal Act is hereby amended by adding the following subsection: "(6) Where any amount of tax charged is required to be shown on any credit note or debit note, and that amount

25 654 Goods and Seruice5 Tax Amendment 1986, No. 43 consists of any number of dollars and cents together with any fraction or part of a cent, that fraction or part of that cent, "(a) If less than or equal to half of that cent, may be disregarded for the purposes of this section: "(b) If in excess of half of that cent, shall be deemed for the purposes of this section to be an amount equal to one cent." 21. Bad debts-(l) Section 26 (1) of the principal Act is hereby amended by omitting the words "who is required to account for tax payable on an invoice basis pursuant to section 19 of this Act". (2) Section 26 (1) of the principal Act is hereby further amended by adding the following proviso: "Provided further that this subsection shall not apply to a registered person who is required to account for tax payable on a payments basis pursuant to section 19 of this Act, except in respect of any supply made by that person to which section 9 (2) (b) or section 9 (3) (b) of this Act applies." (3) Section 26 of the principal Act is hereby further amended by inserting, after subsection (1), the following subsection: "(la) Where a registered person has, in respect of the supply by that registered person of any contract of insurance (being a supply charged with tax pursuant to section 8 (1) of this Act),- "(a) Paid any amount to the Earthquake and War Damage Commission pursuant to the Earthquake and War Damage Act 1944 or to the Fire Service Commission pursuant to the Fire Service Act 1975; and "(b) Sought to recover that amount, together with the consideration for that supply, from the recipient of that supply; and "(c) Written off as a bad debt the whole or part of that amount not paid to that registered person,- that registered person shall make a deduction under section 20 (3) of this Act of the tax fraction of that amount or that part of that amount written off. 22. Objections to certain decisions-section 32 (1) of the principal Act is hereby amended by repealing paragraphs (a) to (g), and substituting the following paragraphs: "(a) Section 11 (1) (a) (ia): "(b) Section 15 (2), (3), (4), or (5): "(c) Section 19: "(d) Section 24:

26 1986, No. 43 Goods and Services Tax Amendment 655 "(e) Section 25 (3B): "(f) Section 51: "(g) Section 52: "(h) Section 55: "(i) Section 56: "(j) Section 84 (4): "(10 Section 86 (1);-". 28. Determination of objection not to affect other assessments or decisions-the principal Act is hereby amended by repealing section 39, and substituting the following section: "39. The determination of an objection under this Part of this Act shall relate solely to the assessment or decision (as defined in section 32 (l) of this Act) objected to, and shall not affect the right of the Commissioner to make any other assessment or such decision in respect of the objector, or to amend the a~sessment or such decision objected to in any manner rendered necessary by that other assessment or such decision. " 24. Refund of excess tax-(l) Section 45 of the principal Act is hereby amended by repealing subsection (1), except for the proviso thereto, and substituting the following subsection: "(1) Subject to this Part of this Act, where any registered person has paid to the Commissioner any amount in excess of the amount of tax payable properly calculated in accordance with this Act in respect of any taxable period, the Commissioner shall refund the amount paid in excess:". (2) Section 45 of the principal Act is hereby further amended by repealing subsection (2), except for the proviso thereto, and substituting the following subsection: "(2) Notwithstanding anything in section 20 (5) of this Act, in any case where an assessment has been made pursuant to section 27 of this Act so as to change any amount of tax payable by any registered person or refundable by the Commissioner, and the Commissioner is satisfied that by reason of that assessment either- "(a) Tax has been paid by that person in excess of the amount properly payable; or "(b) An amount has been refunded to that person by the Commissioner pursuant to section 19 (9) or section 20 (5) or section 46 of this Act and that amount is less than the amount properly refundable,-

27 656 Goods and Services Tax Amendment 1986, No. 43 the Commissioner shall, notwithstanding that the time limited in accordance with subsection (1) of this section for the making of a refund may have expired, refund, pursuant to this section, the tax so paid in excess or, as the case may be, the amount properly refundable to the extent that that amount exceeds the amount that has been refunded:". 25. Interest on refunds-(l) Section 46 of the principal Act is hereby amended- (a) By omitting from subsections (1), (4), (5), and (6) the words "15 working days from", and substituting in each case the words "15 working days following": (b) By omitting from subsection (2) the words "and subsection (4)": (c) By inserting in subsection (2) and also in subsection (3), in each case after the words "or section 45 of this Act", the words "or any amount of interest payable under this section": (d) By inserting in subsection (5), before the words "In any case", the words "Subject to the!roviso to subsection (1) and to subsections (2) an (3) of this section,": (e) By omitting from item "z" in subsection (6) the expression "subsection (8)", and substituting the expression "subsection (9)". (2) Section 46 (6) of the principal Act is hereby further amended by adding the following proviso: "Provided that where the Commissioner has failed to give notice within the period specified in subsection (4) of this section but such notice is subsequently given, interest payable by the Commissioner in accordance with this section shall be calculated as if the day on which that notice is given were the date that the amount required to be refunded by the Commissioner is refunded by the Commissioner." 26. Persons making supplies in course of taxable activity to be registered-section 51 m of the principal Act is hereby amended- (a) By inserting, after the words "value of supplies made", the words "in New Zealand": (b) By inserting, after the words "supplies to be made", the words "in New Zealand". 27. Cancellation of registration-m Section 52 (3) of the principal Act is hereby amended by inserting, after the words

28 1986, No. 43 Goods and ServICes Tax Amendment 657 "the registration of any such person", the words "with effect from the last day of the taxable period during which all such taxable activities ceased, or from such other date as may be determined by the Commissioner". (2) Section 52 of the principal Act is hereby amended by repealing subsection (6). 28. Registered person to notify of change of status Section 53 (c) of the principal Act is hereby amended- (a) By omitting the words "or section 15 (3)": (b) By inserting, after the words "made a determination", the words "or direction". 29. Group of companies-(i) Section 55 (1) of the principal Act is hereby amended by adding the following proviso: "Provided that for the purposes of this Act, 2 or more companies shall be a group of companies pursuant to section 191 of the Income Tax Act 1976 where, at the last day of any month, those companies would, if that last day were the last day of an income year for the purposes of the Income Tax Act 1976, be a group of companies pursuant to the said section 191." (2) Section 55 (7) of the principal Act is hereby amended by insertin~ in paragraph (c), after the word "disregarded", the words ' to the extent that input tax in respect of that supply would be deductible by the recipient if that recipient had not been a member of that group". (3) Section 55 (7) of the principal Act is hereby further amended by inserting, after paragraph (d), the following paragraph: "(da) Any supply of goods and services, other than a taxable supply, made by a member of the group, shall be deemed to be made by the representative member; and". (4) Section 55 (8) of the principal Act is hereby amended by.. fi th d " "h d" h" msertmg, a ter e wor not, t e wor eac. 80. Unincorporated bodies-section 57 (6) of the principal Act is hereby amended by inserting, after the words "Notwithstanding anything in this section,", the words "but subject to subsection (3) of this section,". 81. Agents and auctioneers-(i) Section 60 of the principal Act is hereby amended by repealing subsection (1), and substituting the following subsection: B-8

29 658 Goods and Services Tax Amendment 1986, No. 43 "(1) Subject to this section, for the purposes of this Act, where an agent makes a supply of goods and services for and on behalf of any other person who is the principal of that agent, that supply shall be deemed to be made by that principal and not by that agent: "Provided that, where that supply is a taxable supply, that agent, being a registered person, may, notwithstanding anything in this Act, issue a tax invoice or a credit note or a debit note in relation to that supply as if that agent had made a taxable supply, and to the extent that that tax invoice or credit note or debit note relates to that supply, that principal shall not also issue, as the case may be, a tax invoice or a credit note or a debit note." (2) Section 60 of the principal Act is hereby amended- (a) By inserting in the proviso to subsection (2), after the words "issue a tax invoice", the words "or a credit note or a debit note": (b) By inserting in subsection (3), after the words "a tax invoice", the words "or a credit note or a debit note". (3) Section 60 of the principal Act is hereby further amended by adding the following subsection: "(6) Notwithstanding anything in subsection (2) of this section, where any registered person makes a taxable supply (not being a supply that is charged with tax at the rate of zero percent pursuant to section 11 of this Act) of goods and services to an agent, being a registered person, who is acting for or on behalf of another person who is the principal for the purposes of that supply, and- "(a) That principal is not resident in New Zealand and is not a registered person; and "(b) That supply is directly in connection with either the exportation, or the arranging thereof, of goods from New Zealand to any country or place outside New Zealand, or the importation, or the arranging thereof, of goods to New Zealand from any country or place outside New Zealand, including, in either case, the transportation of those goods within New Zealand as part of that exportation or, as the case may be, importation,- this Act shall, where that agent and that principal agree, have effect as if that supply were made to that agent and not to that principal. "

30 1986, No. 43 Goods and Services Tax Amendment Offences-(l) Section 62 (1) (f) of the principal Act is hereby amended by omitting the word "either". (2) Section 62 (I) (f) is hereby further amended by adding the following subparagraph: "(iii) The supply in respect of the tax charged will not take place; or". (3) Section 62 (I) of the principal Act is hereby further amended by inserting, after paragraph (k.), the following paragraph: "(ka) Knowingly contravenes the provisions of section 24 (l) (a) or section 25 (3) (c) of this Act; or". (4) Section 62 (2) of the principal Act is hereby amended by inserting, after the words "or paragraph ~)", the words "or paragraph (ka)". 33. New Zealand currency-section 77 of the principal Act is hereby amended by adding the words ", and in any case where and to the extent that any such amount is consideration in money for a supply, that amount shall be expressed in terms of New Zealand currency as at the time of that supply". 34. Effect of imposition or alteration of tax-(l) Section 78 (2) of the principal Act is hereby amended- (a) By omitting the words ", being a registered person, has", and substituting the words "has, at any time": (b) By omitting the words "it is dear from the terms of the agreement or contract that", and substituting the word "where". (2) Section 7 8 (2) of the principal Act is hereby further amended by adding the following proviso: "Provided that this subsection shall not apply where that alteration in the law is the coming into force of the provisions of this Act and where that contract or agreement is entered into on or after the 1 st day of January 1987." (3) Section 78 (3) of the principal Act is hereby amended (a) By inserting, after the words "prescribed by", in each place where they occur, the words ", or determined pursuant to,": (b) By inserting, after the words "so prescribed", in each place where they occur, the words "or determined". (4) Section 78 (3) of the principal Act is hereby amended by adding the following provisos: "Provided that where any such Act or regulation prescribes or determines either a maximum or a minimum amount in

31 660 Goods and Services Tax Amendment 1986, No. 43 respect of any supply of goods and services, that maximum or, as the case may be, minimum amount shall, for the purposes of any such Act or regulation, be deemed to be increased or, as the case may be, decreased, by the amount of tax charged or, as the case may be, tax no longer charged by virtue of this subsection: "Provided further that this subsection shall not apply to any fee, charge, or other amount prescribed or determined which is required to be paid by any public authority to any other person by virtue of that Act or regulation." (5) Section 7 8 of the principal Act is hereby further amended by repealing subsection (5), and substituting the following subsection: "(5) Where any supply is or becomes charged with tax pursuant to this Act, the amount of any increase in consideration in respect of that supply attributable to the tax charged on that supply shall be recoverable by the supplier from the recipient of the taxable supply." 85. Deductions for sales tax-section 83 (l) of the principal Act is hereby amended- (a) By omitting from paragraph (c) of the definition of the expression "trading stock" the words "sales tax", and substituting the words "excise duty imposed by Part IV A of the Customs Act 1966": (b) By adding to paragraph (d) of that definition the words ", not being goods in respect of which that registered person has paid sales tax". 86. Supplies prior to 1 October 1986-(1) Section 84 (1) (a) of the principal Act is hereby amended by inserting, after subparagraph (i), the following subparagraph: "(ia) Where the goods are to be removed and where the property in those goods will pass from the supplier to the recipient, the earlier of the time of the removal and the time that that property pass e s ".. (2) Section 84 of the principal Act is hereby further amended by inserting, after subsection (1), the following subsections: "(la) Where any registered person supplies or agrees to supply services by virtue of or pursuant to any contract, agreement, or enactment, (whether conditionally or unconditionally, on the happening of any event or any contingency, or otherwise), and that contract, agreement, or

32 1986, No. 43 Goods and Services Tax Amendment 661 enactment expressly or impliedly provides that for, or in respect of, any period or periods, that- "(a) Any right is to be granted or exercisable, or any thing is to be done, or omitted to be done; or "(b) Any payment is due, or may be made; or "(c) The contract or agreement is in force, or enforceable, or will have effect,- those services shall for the purposes of subsection (1) (b) of this section be deemed to be performed by that registered person continuously and uniformly during the whole of that period or those periods." "0 B) Where any services are supplied pursuant to any contract, agreement, or enactment which provides that any right is to be granted or exerciseable by any individual for a period which will end with the termination of the life of that individual, and where that contract, agreement, or enactment provides for a single non refundable payment as consideration for the granting or exercising of that right, those services shall, for the purposes of subsection (1) (b) of this section, be deemed to have been performed at the earlier of the time that that right is granted by the supplier or first becomes exerciseable." (3) Section 84 (3) (b) of the principal Act is hereby amended by repealing sub paragraph (iii), and substituting the following subparagraph: "Gii) For the purposes of sections 20 (3) (b) (i) and 20 (4) (b) (i) of this Act, where and to the extent that any payment has been made or, as the case may be, received in respect of that supply before the 1st day of October 1986, that payment shall be deemed to have been made or, as the case may be, received on the 1st day of October 1986." (4) Section 84 (3) of the principal Act is hereby further amended by inserting, before the words "Notwithstanding anything in section 9 or section 21 of this Act,", the words "Subject to subsection (4) of this section and". (5) Section 84 of the principal Act is hereby further amended by repealing subsection (4) except for the provisos thereto, and substituting the following subsection: "(4) Notwithstanding anything in subsection (3) of this section, where and to the extent that any supply of goods is the construction, major reconstruction, manufacture, or extension of a buiding or a civil engineering work by the supplier, and the goods,-

33 662 Goods and Services Tax Amendment 1986, No. 43 "(a) Are sold pursuant to any written contract entered into before the 1st day of October 1986; and "(b) Are made available to the recipient on or after the 1 st day of October 1986,- the value of all work and materials permanently incorporated in or affixed on the site of the building or civil engineering work pursuant to that contract shall be determined as at the close of the 30th day of September 1986, and- "(c) To the extent that the aggregate of the consideration in money for all supplies in respect of the sale of those goods which, pursuant to section 9 (I) or section 9 (3) (aa) (ii) of this Act, took place before the 1st day of October 1986, exceeds that value, the amount of that excess shall be deemed to be consideration in money for a taxable supply made by that supplier on the 1st day of October 1986 and charged with tax pursuant to section 8 (I) of this Act: "(d) To the extent that that value exceeds the aggregate of the consideration in money for all supplies in respect of the sale of those goods which, pursuant to section 9 (1) or section 9 (3) (aa) (ii) of this Act, took place before the 1st day of October 1986, the consideration in money for the first supply in respect of the sale of those goods which, pursuant to section 9 (1) or section 9 (3) (aa) (ii) of this Act, takes place on or after the 1st day of October 1986 shall be deemed to be reduced by the amount of that excess: "Provided that any part of the amount of that excess remaining, in any case where that consideration is reduced to nil as a result of the application of this paragraph, shall be carried forward and the consideration for any subsequent such supply shall be deemed to be reduced to that extent, and so on". (6) Section 84 (4) of the principal Act is hereby amended by inserting in the first proviso, after the words "a competent independent valuer", the words ", or by any other competent valuer that the Commissioner may, in the Commissioner's discretion, approve". 87. Certain contracts entered into on or before 20 August 1985-(1) Section 85 (1) of the principal Act is hereby amended by inserting in the definition of the expression "non reviewable contract"-

34 1986, No. 43 Goods and ServICes Tax Amendment 663 (a) After the words "any written contract", the words ", or any agreement entered into pursuant to an enactment," : (b) After the words "the contract" in each place where they occur, in each case the words "or, as the case may be, agreement": (c) After the words "imposition of the goods and services tax", the words "; but does not include any contract that provides for or otherwise contemplates a general review of the consideration in money for that supply". (2) Section 85 (1) of the principal Act is hereby further amended by repealing the definition of the term "reviewable contract", and substituting the following definition: " 'Reviewable contract', in relation to any supply, means any written contract, not being a non-reviewable contract, for the supply of goods and services where the consideration in money for that supply is specified in the contract either by reference to an amount of money or by way of a formula:". ss. Alternative method of accounting for transitional supplies-the principal Act is hereby amended by adding, after section 85, the following section: "86_ (l) For the purposes of this Act, where any registered person who is required to account for tax payable on a payments basis pursuant to section 19 of this Act makes application in writing, the Commissioner shall direct that the provisions of this section shall apply to that registered person in respect of any supply or class of supply determined at the discretion of the Commissioner {hereafter in this section referred to as a 'specified supply'}. "(2) For the purposes of this Act, in respect of any specified supply, where the Commissioner has made a determination in accordance with subsection (1) of this section,- "(a) The supplier shall be deemed to be required to account for tax payable on an invoice basis pursuant to section 19 of this Act for each such specified supply to which section 84 of this Act applies and in respect of which an invoice has been issued or any payment received prior to the 1 st day of October 1986, and shall be deemed to have received payment in full on the 1st day of October 1986 for each such supply:

35 664 Goods and Services Tax Amendment 1986, No. 43 "(b) Where any amount of the consideration in money for that supply (not being a supply to which paragraph (c) of this subsection applies) remains unpaid as at the end of the 30th day of September 1986 (not being an amount written off as a bad debt as at that date), the supplier shall set off against any amount of tax payable by that supplier in respect of the taxable period in which the 1st day of October 1986 occurs, an amount equal to the tax fraction of the amount of such consideration remaining unpaid, and to the extent that it cannot be so set off, that amount shall be carried forward to the next taxable period and set off against any amount of tax payable by that supplier in respect of that next taxable period, and so on: "(c) Where any supply to which section 84 of this Act applies and in respect of which no invoice has been issued nor any payment received prior to the 1st day of October 1986, the supplier shall, in anyone taxable period ending prior to the 1st day of October 1987, set off against any amount of tax payable by that supplier in respect of that taxable period, an amount equal to the tax fraction of the portion of the consideration in money in respect of any such supply that, by virtue of section 84 (3) (a) of this Act, is not subject to tax pursuant to section 8 (1) of this Act, and to the extent that it cannot be so set off, that amount shall be carried forward to the next taxable period and set off against any amount of tax payable by that supplier in respect of that next taxable period, and so on: "(d) Any payment received on or after the 1st day of October 1986 in respect of any specified supply to which paragraph (b) or paragraph (c) of this subsection appfies shall, notwithstanding anything in this Act, be deemed to be consideration in money for a taxable supply made by that supplier and charged with tax pursuant to section 8 (1) of this Act, and the supplier shall include as output tax, in the taxable period during which that payment has been received, an amount equal to the tax fraction of that payment: "(e) Where and to the extent that any amount remaining unpaid to which paragraph (b) or paragraph (c) of this subsection applies is written off as a bad debt