The Inland Revenue has issued a public consultation on ”GST grouping for companies”. Input is due Sept 14, 2023.
Summary
- 1. This Interpretation Statement explains how the GST grouping rules apply to companies.
- 2. The GST grouping rules allow a group of related companies to be treated as a single company, if they meet certain eligibility requirements. The rules help to reduce distortions that might otherwise arise between a single entity, a branch structure and a group structure. The GST grouping rules also help to reduce compliance costs.
- 3. This Interpretation Statement explains the consequences of GST grouping for companies. These are:
- The representative member is treated as carrying on all group members’ activities, as a registered person.
- Taxable supplies made by group members to persons outside the GST group are treated as taxable supplies made by the representative member, as a registered person.
- Taxable supplies made to group members from persons outside the GST group are treated as taxable supplies made to the representative member.
- Taxable supplies between group members are mainly disregarded.
- Non-taxable supplies made by or to group members are treated as made by or to the representative member. Intra-group non-taxable supplies are not disregarded.
- The representative member claims all input tax deductions.
- The representative member makes all input tax adjustments where there is a change in the use of goods or services that were acquired by group members.
- 4. Under the GST grouping rules, most supplies made by group members to persons outside the GST group are treated as made by the representative member, as a taxable person. Occasionally, these rules can have significant implications for the treatment of a supply. For example, if a non-registered company is part of a GST group and it makes supplies to persons outside the GST group, those supplies will be treated as made by the representative member, as a registered person. Therefore, the supplies become taxable supplies (provided they would be taxable supplies if made by a registered person) and GST must be charged. Similarly, if a non-resident company is part of a GST group and the representative member is a New Zealand resident, supplies made by that non-resident company are treated as made by the representative member from New Zealand. As a result, the GST grouping rules can change the place of a supply.
- 5. This Interpretation Statement contains examples that illustrate how the GST grouping rules apply to various scenarios. It also discusses some of the specific compliance and administrative rules that apply to GST groups.
- 6. While this Interpretation Statement focuses on the GST grouping rules as they apply to companies, the same principles may apply to other entities that are eligible to form a GST group
Source govt.nz
