Do you have someone selling your products or incurring costs on your behalf? Inland Revenue have identified that taxpayers have been facing difficulties understanding and applying the agency rules in the Goods and Service Tax Act 1985 (‘the GST Act’). In a bid to provide some clarity, Inland Revenue have released an interpretation statement that dives into all the details of when you may be a party to an agency relationship and what this means for GST purposes.
From a GST perspective it is important to be certain whether an agency relationship exists to ensure all parties involved have a clear understanding of who has to return or claim GST. Getting this wrong can be costly. Sometimes the position can look to be GST neutral, but without proper documentation, technical issues can arise. In other areas, an outright cash cost can occur.
Source: Deloitte NZ
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