Interpretation statements: GST and finance leases

This interpretation statement explains how to classify finance leases for the purposes of the time of supply and value of supply rules. It also explains how to account for GST on finance leases when applying any special time and value of supply rules.

Contents
Summary ………………………………………………………………………………………………………………………………….. 2
Classifying finance leases – time of supply …………………………………………………………………….. 2
Classifying finance leases – value of supply……………………………………………………………………. 4
Accounting for GST on finance leases …………………………………………………………………………….. 4
Agency issues on selling goods……………………………………………………………………………………….. 5
Introduction……………………………………………………………………………………………………………………………… 5
Reasons for updating the statement ………………………………………………………………………………. 5
What this statement covers……………………………………………………………………………………………… 6
What is meant by “finance lease” ……………………………………………………………………………………. 6
Classifying finance leases – time of supply ……………………………………………………………………………. 6
When finance leases are hire purchase agreements………………………………………………………. 8
When finance leases are agreements to hire………………………………………………………………….21
When finance leases are third category agreements ……………………………………………………28
Summary – time of supply for finance leases………………………………………………………………..28
Classifying finance leases – value of supply………………………………………………………………………….30
Finance leases that are credit contracts ………………………………………………………………………….31
Summary …………………………………………………………………………………………………………………………. 35
Accounting for GST on finance leases …………………………………………………………………………………..36
Hire purchase agreements……………………………………………………………………………………………… 37
Third category agreements …………………………………………………………………………………………….38
Agreement to hire and a credit contract……………………………………………………………………….39
Summary ………………………………………………………………………………………………………………………….45
Agency issues on selling goods……………………………………………………………………………………………..46
General rule ……………………………………………………………………………………………………………………..46
Alternative approach if treated as separate supplies ……………………………………………………47
Appendix ………………………………………………………………………………………………………………………………… 50
Credit Contracts Act 1981 (repealed)………………………………………………………………………………50
References………………………………………………………………………………………………………………………………..51
About this document…………………………………………………………………………………………………………….. 53

Source: govt.nz

---

---