GST – Arranging and brokering financial products

PUB00463 is an interpretation statement from New Zealand’s Inland Revenue (IRD) that provides guidance on the Goods and Services Tax (GST) treatment of services provided by intermediaries or brokers involved in the supply of financial products. [1] [2]

Here’s a summary in three bullet points:

• Focus on “Arranging” vs. “Advising”: The statement clarifies when the activities of intermediaries or brokers constitute an “exempt supply” for GST purposes by “arranging” financial services, as opposed to merely “advising on” them. Activities that amount to “advising thereon” are excluded from exemption. [1] [2]
• Exempt Supply of Financial Services: Generally, financial services are exempt from GST in New Zealand. The interpretation statement helps determine when an intermediary’s involvement in the supply of a financial product qualifies as an exempt supply of “arranging” under section 3(1)(l) of the Goods and Services Tax Act 1985. This occurs when their activities are directly involved in an integral part of the supply chain intended to bring about the supply of a financial service. [2] [3]
• Complexity and Apportionment: The document acknowledges the complexity of commercial arrangements in this area, stating that the GST outcome depends on specific facts and circumstances. It also notes that if both exempt and taxable supplies are made for a global consideration, apportionment of GST may be required. [2]