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Goods and Services Tax Act 1985

Returns and payment of tax - Calculation of tax payable: deductions, apportionment, other adjustments

25AB: Consequences of change in contract for secondhand goods

You could also call this:

"What happens if there's a mistake with tax when buying secondhand goods?"

Illustration for Goods and Services Tax Act 1985

If you buy secondhand goods from someone and they make a mistake with the tax, you might have to pay more tax. This can happen if the supplier cancels the sale, you return the goods, or they get the tax rate or amount wrong. You can find out how to work out the tax you need to pay by looking at section 3A(3).

If you claim too much tax back, you will have to pay the extra tax when you find the mistake. This extra tax is treated like tax on a sale you made. You will have to pay this tax for the period when you found the mistake.

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This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7214709.

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Money and consumer rights > TaxesMoney and consumer rights > Consumer protection
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Part 3Returns and payment of tax
Calculation of tax payable: deductions, apportionment, other adjustments

25ABConsequences of change in contract for secondhand goods

  1. This section applies to a supply of secondhand goods to a registered person for which the registered person returns input tax determined under section 3A(3) if—

  2. the supply is affected by 1 or more of—
    1. a cancellation of the supply:
      1. a return, to the supplier, of all or part of the supply:
        1. an incorrect description of the supply:
          1. an incorrect rate of tax:
            1. an incorrect amount of tax charged:
              1. a change to the previously agreed consideration for the supply; and
              2. the registered person returns input tax on the supply as a deduction from the amount of output tax for a taxable period in the calculation of tax payable by the registered person for the taxable period; and
                1. as a result of the event referred to in paragraph (a), the amount of input tax on the supply returned by the registered person exceeds the correct amount of input tax for the supply; and
                  1. the supplier does not provide taxable supply information or supply correction information in relation to the supply.

                    1. An amount equal to the amount of the excess referred to in subsection (1)(c) is treated as being tax charged in relation to a taxable supply made by the registered person for the taxable period in which the error in the amount of input tax is found.

                    Notes
                    • Section 25AB: inserted, on , by section 363 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                    • Section 25AB(1): amended (with effect on 30 March 2017), on , by section 401(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                    • Section 25AB(1)(a): replaced, on , by section 33(1) (and see section 33(4) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                    • Section 25AB(1)(d): amended, on , by section 33(2) (and see section 33(4) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                    • Section 25AB(2): amended, on , by section 33(3) (and see section 33(4) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).