Goods and Services Tax Act 1985

Returns and payment of tax

19A: Requirements for accounting on payments basis

You could also call this:

"When you can do your tax returns based on the payments you receive"

Illustration for Goods and Services Tax Act 1985

The Commissioner will not tell you to account for tax payable on a payments basis under section 19 unless you are a non-profit body, a non-resident, or your taxable supplies are below a certain amount. You must have taxable supplies worth $2,000,000 or less in a 12-month period. The Commissioner must think it is a good idea for you to do your tax returns on a payments basis.

If the Commissioner thinks you should account for tax payable on a payments basis, but then you do not meet the conditions, the Commissioner will tell you to account for tax payable on an invoice basis. You can ask the Commissioner if you can account for tax payable on a hybrid basis instead. The Commissioner will make this decision based on the information you give them.

You will not be treated as not meeting the conditions just because your taxable supplies go over the amount specified, if this happens because you stopped or reduced a taxable activity, or replaced a plant or asset. This rule applies if you stopped or reduced a taxable activity, or replaced a plant or asset. The Commissioner's decision is based on your specific situation.

An order about the amount of taxable supplies is secondary legislation, which means it has to be published, as explained in Part 3 of the Legislation Act 2019. This order is important for your tax returns. You can find more information about secondary legislation in the link provided.

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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=DLM83449.

Topics:

Money and consumer rights > Taxes

19: Accounting basis, or

"How you pay tax: when you send an invoice or when you get paid"

19AB: Local authorities accounting on payments basis on and after 1 July 2001, or

"How local councils used to do their tax accounting from 2001 to 2013"

Part 3Returns and payment of tax

19ARequirements for accounting on payments basis

The Commissioner shall not direct any registered person to account for tax payable on a payments basis under section 19 unless—
the registered person is—
3. a non-profit body; or
4. a non-resident; or
in respect of the registered person—
1. at the end of any month, the total value of the person's taxable supplies in the period of 12 months then ending has not exceeded $2,000,000 (or such greater amount as the Governor-General may, from time to time, by Order in Council declare); or
2. in the period of 12 months beginning on the first day of any month, the total value of the person's taxable supplies is not likely to exceed the amount specified in or under subparagraph (i); or
the Commissioner is satisfied that, due to the nature, volume, and value of taxable supplies made by the registered person and the nature of the accounting system employed by the person, it would be appropriate for the person to furnish returns under this Act on a payments basis.

Where the Commissioner is satisfied (whether by a notification given by the registered person under section 53(1)(cb) or otherwise) that a registered person who has been directed to account for tax payable on a payments basis has ceased to satisfy the conditions set out in paragraphs (a) to (c) of subsection (1), the Commissioner shall either—
direct that the registered person account for tax payable on an invoice basis; or
on application by the registered person, direct that the registered person account for tax payable on a hybrid basis.

For the purposes of subsection (2), a registered person shall not be treated as having ceased to satisfy the conditions of subsection (1) by reason only that the total value of the registered person's taxable supplies has exceeded, or as the case may be will exceed, the amount specified by or under subsection (1)(b) solely as a consequence of—
any ending of, including a premature ending of, or any substantial and permanent reduction in the size or scale of, any taxable activity carried on by that person; or
the replacement of any plant or other capital asset used in any taxable activity carried on by that person.

An order under subsection (1)(b)(i) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).

Notes

Section 19A: inserted, on 1 April 1991 (applying to allow changes in a registered person's accounting basis in respect of taxable periods commencing on and after 1 April 1991), by section 3(1) of the Goods and Services Tax Amendment Act 1991 (1991 No 11).
Section 19A(1)(a)(i): repealed, on 10 April 1995, by section 7 of the Goods and Services Tax Amendment Act 1995 (1995 No 22).
Section 19A(1)(a)(ii): repealed (with effect on 1 July 2013), on 17 July 2013, by section 127(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section 19A(1)(a)(iv): inserted, on 1 April 2014, by section 127(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section 19A(1)(b)(i): amended, on 30 March 2009, by section 26 of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
Section 19A(2): amended, on 23 September 1997, by section 111 of the Taxation (Remedial Provisions) Act 1997 (1997 No 74).
Section 19A(2)(b): amended, on 2 June 2016, by section 188 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section 19A(3)(a): amended, on 10 October 2000 (applying on and after 10 October 2000), by section 96(3) of the Taxation (GST and Miscellaneous Provisions) Act 2000 (2000 No 39).
Section 19A(4): inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).