Goods and Services Tax Act 1985

Transitional provisions

87: Change of accounting basis: transitional provision for certain local authorities

You could also call this:

"Local authorities must change how they account for tax payable, with options to spread payments over time."

Illustration for Goods and Services Tax Act 1985

If you are a local authority that is affected by the Goods and Services Tax (Local Authorities Accounting on Payments Basis) Order 2009, you need to change how you account for tax payable. From 1 July 2013, you must account for tax payable on an invoice basis. You can spread the tax payable over 72 months starting from 1 July 2013, and if the amount is not exactly divisible, the last instalment will be slightly different.

When you change your accounting basis, you calculate the tax payable on the day before the change takes effect. You can still spread this amount over 72 months as described earlier. If you change your accounting basis before 1 July 2013, you can pay the tax payable in instalments without incurring any late payment penalties or interest.

You will not have to pay any late payment penalties, shortfall penalties, or interest under Part 7 of the Tax Administration Act 1994 when you spread the tax payable over 72 months, even if you change your accounting basis before 1 July 2013 and incur a tax liability.

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This page was last updated on 18 July 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM5499561.

Topics:

Money and consumer rights > TaxesGovernment and voting > Local councils

86: Alternative method of accounting for transitional supplies, or

"A simpler way to account for tax on some supplies when the GST law changed"

88: Valuation: non-profit body making certain supplies, deregistering, or acquiring certain assets of non-profit body, or

"Rules for non-profit groups to value things they supply or buy"

Part 12Transitional provisions

87Change of accounting basis: transitional provision for certain local authorities

This section applies to a local authority referred to in the Goods and Services Tax (Local Authorities Accounting on Payments Basis) Order 2009.
From 1 July 2013, the local authority must account for tax payable on an invoice basis.
On the change of accounting basis, the local authority may spread the tax payable under section 19C(1) and calculated under section 19C(3) evenly over a period of 72 months commencing on 1 July 2013. If the full amount is not divisible into exactly equal instalments, the final instalment carries the difference.
If a local authority changes their accounting basis before 1 July 2013, the amount of the tax payable must be calculated on the day before the date on which the change is to take effect, although the amount remains available to be paid as described in subsection (3).
No late payment penalty, shortfall penalty, or interest under Part 7 of the Tax Administration Act 1994 arises for the local authority as a result of its application of the spreading provision in subsection (3), whether or not the authority incurs a tax liability because it changes its accounting basis before 1 July 2013.

Notes

Section 87: inserted, on 17 July 2013, by section 146 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).