Goods and Services Tax Act 1985

78AA Exceptions to effect of increase of tax

(1)

For the purposes of this section,—

(a)

rate change day is the day on which an increase in the rate of tax imposed by section 8 comes into force:

(b)

original rate is the rate of tax imposed by section 8 immediately before the rate change day.

(2)

Despite section 8(1), subsection (3) applies to an insurer who is deemed under section 5(13B) to receive a recovered amount as consideration for a supply—

(a)

to the extent that the insurer, before the rate change day, accepts the claim to which the recovery relates and—

(i)

pays the claim:

(ii)

agrees the recovered amount unconditionally; and

(b)

if the amount recovered is received by the insurer on or after the rate change day; and

(c)

if the insurer elects that subsection (3) apply to the recovery by treating the recovery in that way in a return provided to the Commissioner.

(3)

The deemed supply by the insurer is charged with tax at the original rate.

(4)

Despite section 8(1), subsection (5) applies to a supply of goods that are personal property by a registered person under an agreement if—

(a)

section 9(3)(a) applies to the supply; and

(b)

the recipient of the supply makes periodic payments to the registered person during the term of the agreement; and

(c)

part of the amount payable to the registered person under the agreement is consideration for a supply that is the provision of credit under a credit contract; and

(d)

if the agreement were to end early, the amount of tax imposed by section 8 on the supply of the goods would be calculated on the basis that a periodic payment included an amount of payment for the supply referred to in paragraph (c) that decreased for each successive periodic payment; and

(e)

the term of the agreement—

(i)

begins before the rate change day; and

(ii)

ends on or after the rate change day; and

(iii)

is less than or equal to 5 years; and

(f)

the registered person elects that subsection (5) apply to supplies made under the agreement by treating each supply in that way in a return provided to the Commissioner; and

(g)

within 30 days after the rate change day, the registered person gives notice to the recipient of the supplies, if the recipient is a registered person, that payments by the recipient made after the rate change day include goods and services tax charged at the original rate.

(5)

Each successive supply under the agreement that is deemed to take place on or after the rate change day is charged with tax at the original rate.

(6)

Despite section 5(5), subsection (7) applies to a supply of goods under an agreement that is a layby sale to which subpart 1 of Part 4A of the Fair Trading Act 1986 applies if—

(a)

the agreement is made before the day on which the increase in the rate of tax is announced; and

(b)

after the rate change day, the goods are delivered to the buyer and the property in the goods is transferred to the buyer; and

(c)

the registered person elects that subsection (7) apply to supplies made under the agreement by treating each supply in that way in a return provided to the Commissioner.

(7)

Goods and services tax is charged on the supply of the goods under the agreement (the agreed supply) as if there were 2 supplies consisting of—

(a)

a supply on the day before the rate change day, for which the consideration is the payment for the agreed supply that the registered person receives before the rate change day; and

(b)

a supply on the day that the agreed supply would have occurred in the absence of this subsection, for which the consideration is the payment for the agreed supply that the registered person receives on or after the rate change day.

(8)

Subsection (9) applies to a supply of goods or services if—

(a)

the invoice for the supply is dated before the rate change day; and

(b)

the invoice is issued—

(i)

on or before the second Monday after the rate change day; and

(ii)

consistently with the registered person’s practice of issuing invoices for such supplies; and

(c)

payment for the supply is due on or before the day that is 60 days after the date of the invoice; and

(d)

the registered person elects that subsection (9) apply to the supply by treating the supply in that way in a return provided to the Commissioner.

(9)

The supply is treated as being made on the day of the date of the invoice, despite section 9(3)(a) if that provision would otherwise apply.

(10)

Despite section 9(1), (2)(a), and (3), subsection (11) applies to a supply by a registered person under an agreement if—

(a)

section 9(3)(a) would apply to the supply in the absence of this subsection; and

(b)

the term of the agreement begins before the rate change day and ends after the rate change day; and

(c)

under the agreement, the consideration for a supply is set or reviewed for periods of 396 days or less during the term of the agreement; and

(d)

the registered person elects that subsection (11) apply to supplies made under the agreement during a period in which the day before the rate change day occurs (the rate change period) by including on that basis each supply in a return provided to the Commissioner; and

(e)

within 30 days after the rate change day, the registered person gives notice to the recipient of the supplies, if the recipient is a registered person, that payments made after the rate change day by the recipient for supplies made in the rate change period include goods and services tax charged at the original rate.

(11)

If this subsection applies to a supply for a rate change period and, in the absence of this subsection, the supply would be made on or after the rate change day,—

(a)

the supply is treated as being made on the day before the rate change day; and

(b)

the registered person is treated as issuing a tax invoice as required by section 24 for the supply on the day before the rate change day.

(12)

Despite section 25(3) and (3C), and section 143A(1)(f) of the Tax Administration Act 1994, subsection (13) applies to a supply by a registered person who has provided a tax invoice in relation to the supply if—

(a)

the rate change day occurs after the registered person provides the tax invoice for the supply; and

(b)

in the absence of this subsection and subsection (13), the registered person would be required to provide after the rate change day a credit note or debit note for the supply; and

(c)

the registered person elects that subsection (13) apply to the supply by including on that basis the supply in a return provided to the Commissioner.

(13)

If, in the absence of this subsection, the registered person would be required to provide a—

(a)

credit note for a supply,—

(i)

the registered person may provide a replacement tax invoice for the supply; and

(ii)

goods and services tax is charged on the supply under that invoice at the original rate:

(b)

debit note for a supply, the registered person may provide a replacement tax invoice for the supply.

(14)

Despite section 5(13)(a), a supply of services under section 5(13) by a registered person who receives a payment under a contract of insurance on or after the rate change day is treated as being made on the day before the rate change day if—

(a)

the payment is made before the rate change day; and

(b)

the registered person receives the payment on or before the second Monday after the rate change day.

Section 78AA: inserted, on 7 September 2010, by section 193 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).

Section 78AA(5): amended (with effect on 7 September 2010), on 21 December 2010, by section 23(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 78AA(6): amended, on 17 June 2014, by section 41(2) of the Fair Trading Amendment Act 2013 (2013 No 143).

Section 78AA(12): amended (with effect on 7 September 2010), on 21 December 2010, by section 23(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).