20Calculation of tax payable

1. In respect of each taxable period every registered person shall calculate the amount of tax payable by that registered person in accordance with the provisions of this section.

2. A registered person, when including an amount for a supply of goods or services as a deduction in a calculation of an amount of tax payable by the registered person, must,—

3. for a supply, meet the requirements of section 19F; and
4. for a supply that a registered person intends to claim a deduction for under section 20(3) because of an adjustment made under section 25(2)(b) to correct an inaccuracy, have provided supply correction information if required by section 19N; and
5. for a supply in relation to which a registered person intends to claim a deduction under subsection (3)(de), have obtained the information referred to in section 60H(1); and
6. for a supply, other than a taxable supply, of secondhand goods, meet the requirements of section 19H; and
7. for a supply that the registered person treats as being within section 5B, have a record of the supply showing that—
   1. the supply meets the requirements for treatment under section 5B as being made by the registered person; and
   2. the registered person accounts for the output tax charged for the supply; and
8. for a supply that the registered person treats as being made to the registered person as a nominated person under section 60B, have a record of the supply showing that—
   1. the registered person is nominated to be the recipient of the supply by another person (the nominator) under a contract with the supplier to which the registered person is not a party; and
   2. the nominator and the registered person agree that the supply is to be treated as being made to the registered person and record the agreement; and
   3. the registered person pays to the supplier the full consideration for the supply.

9. Subject to this section, in calculating the amount of tax payable in respect of each taxable period, there shall be deducted from the amount of output tax of a registered person attributable to the taxable period—

10. in the case of a registered person who is required to account for tax payable on an invoice basis pursuant to section 19, the amount of the following:
    1. input tax in relation to the supply of goods and services (not being a supply of secondhand goods to which section 3A(1)(c) of the input tax definition applies), made to that registered person during that taxable period:
    2. input tax in relation to the supply of secondhand goods to which section 3A(1)(c) of the input tax definition applies, to the extent that a payment in respect of that supply has been made during that taxable period:
    3. input tax invoiced or paid, whichever is the earlier, pursuant to section 12 during that taxable period:
    4. any amount calculated in accordance with any one of sections 25(2)(b), 25(5), 25AA(2)(b) or 25AA(3)(b); and
11. in the case of a registered person who is required to account for tax payable on a payments basis or a hybrid basis pursuant to section 19, the amount of the following:
    1. input tax in relation to the supply of goods and services made to that registered person, being a supply of goods and services which is deemed to take place pursuant to section 9(1) or section 9(3)(a) or section 9(3)(aa) or section 9(6), to the extent that a payment in respect of that supply has been made during the taxable period:
    2. input tax paid pursuant to section 12 during that taxable period:
    3. input tax in relation to the supply of goods and services made during that taxable period to that registered person, not being a supply of goods and services to which subparagraph (i) applies:
    4. any amount calculated in accordance with any one of sections 25(2)(b), 25(5), 25AA(2)(b) or 25AA(3)(b), to the extent that a payment has been made in respect of that amount; and
15. an amount equal to the tax fraction of any payment made during the taxable period by that registered person to another person pursuant to any contract of insurance:
17. an amount equal to the tax fraction of the payment of a recovered amount to which section 5(13B) applies; and
18. an amount of output tax charged on a supply of remote services to the extent that the supplier has, in relation to the supply, incurred liability for, returned, and paid a consumption tax in another country or territory, when the remote services are—
    1. physically performed in New Zealand; and
    2. supplied to a non-resident person in New Zealand who is not a registered person; and
19. an amount of output tax charged on a supply of distantly taxable goods to the extent that the supplier has, in relation to the supply, incurred liability for, returned, and paid, a consumption tax in another country or territory when the goods are supplied to a person in New Zealand who is not a registered person; and
20. for a supply of listed services referred to in section 8C when the underlying supplier is not a registered person at the time of the supply, the amount of input tax that the operator of an electronic marketplace is required under section 8C(3)(b)(ii) to pass on to the underlying supplier as a flat-rate credit; and
21. in relation to a supply of distantly taxable goods to which section 8(1) applies, an amount included in the consideration for the supply that the supplier repays to a recipient under section 12B(2); and
22. any amount calculated under sections 21D(1) and (3)(a), 21F, and 21FB(2); and
24. any amount of input tax in relation to any supply in respect of which section 19F has operated to deny a deduction of input tax, and that registered person has obtained, during the taxable period, taxable supply information in relation to that supply; and
25. any amount calculated in accordance with section 20A in relation to any goods and services so supplied during that taxable period; and
26. any amount calculated in accordance with section 20C in relation to supplies of financial services in respect of that taxable period; and
28. an amount calculated in accordance with section 21HC in relation to a supply acquired in the taxable period by a unit title body corporate of which the registered person is a member; and
29. the amount given by section 20H in relation to the supply during the taxable period of certain financial services:
30. any amount calculated in accordance with section 26; and
31. in the case of a registered person who receives a resale royalty during the taxable period for the resale of an original visual artwork under section 18 of the Resale Right for Visual Artists Act 2023, the tax fraction of the amount of the resale royalty retained by the collection agency under section 20 of that Act; and
32. the amount equal to the tax fraction of a payment by a unit title body corporate where the payment is a monetary distribution to its members to reimburse the members for a levy or other amount that is treated as consideration for a taxable supply under section 5(8A) or (8AB); and
provided that a registered person who is entitled to deduct an amount from the output tax attributable to a taxable period may deduct that amount from the output tax attributable to a later taxable period if the amount has not previously been deducted from the output tax of the registered person and—
33. the later tax period begins on or before the date that is the second anniversary of the earlier of the following:
    1. the date on which the registered person makes the payment for the taxable supply to which the deduction relates:
    2. the date on which taxable supply information is issued for the taxable supply to which the deduction relates:
34. the failure of the registered person to make the deduction in the earlier taxable period arises from—
    1. an inability of the registered person to obtain taxable supply information:
    2. a dispute over the proper amount of the payment for the taxable supply to which the deduction relates:
    3. a mistaken understanding on the part of the registered person that the supply to which the deduction relates was not a taxable supply:
    4. a clear mistake or simple oversight of the registered person.

35. For the purpose of subsection (3), output tax does not include the tax on the taxable value of a fringe benefit provided or granted to another person under the FBT rules of the Income Tax Act 1994.

36. Repealed

37. Repealed

38. For the purposes of subsection (3), and if subsections (3CB), (3CC), (3D), (3L), (3LB), or (3LC) do not apply,—

39. input tax as defined in section 3A(1)(a) or (c) may be deducted to the extent to which the goods or services are used for, or are intended to be used in, making taxable supplies:
40. input tax as defined in section 3A(1)(b) may be deducted to the extent to which the goods are used for, or are intended to be used in, making taxable supplies other than—
    1. the delivery of the goods to a person in New Zealand:
    2. arranging or making easier the delivery of the goods to a person in New Zealand.

41. A registered person, other than a person who has agreed an apportionment method with the Commissioner under section 20(3E), 20(3EB), 21(4), or 21(4B), who acquired goods and services for $10,000, excluding GST, or less, may not deduct input tax for those goods and services unless subsection (3CC) applies.

42. A registered person referred to in subsection (3CB) may deduct input tax if they acquired the goods and services for the principal purpose of making taxable supplies.

43. A person to whom subsection (3CC) applies may not apportion input tax for an adjustment period, for the goods and services, between taxable and non-taxable use.

44. For the purposes of subsection (3CC), a registered person may not deduct input tax as defined in section 3A(1)(b) if—

45. for a registered person that is a resident, the goods or services are used for making taxable supplies that are the delivery, or arranging or making easier, the delivery of goods to a person in New Zealand; or
46. for a registered person that is a non-resident, the input tax is for imported goods of the type referred to in section 20(3LC).

47. For the purposes of subsection (3CC), all supplies made by a non-resident are treated as if they were made and received in New Zealand.

48. A person may elect not to apply subsections (3CB) and (3CC) if they—

49. opt-out from applying the subsections for at least 24 consecutive months from the date they first opt-out:
50. apply an apportionment method that is agreed between the Commissioner and an industry association of which the person is a member:
51. apply an apportionment method that is available to them in a publication by the Commissioner.

52. A person who makes an election under subsection (3CG) must apply subsection (3CG) to all goods and services acquired by them.

53. A registered person who makes both taxable and exempt supplies is not required to apportion input tax for an adjustment period between such supplies if the registered person has reasonable grounds to believe that the total value of exempt supplies will not exceed the lesser of—

54. $90,000:
55. 5% of the total consideration for all their taxable and exempt supplies for the adjustment period.

56. A registered person who principally makes supplies of financial services may choose to use a fair and reasonable method of apportionment, as agreed with the Commissioner, in relation to the supply for an apportionment on acquisition. For this purpose, the person may include a group of companies.

57. A registered person may choose to use, for apportioning input tax in relation to a supply of goods and services made to the registered person, a fair and reasonable method of apportionment that is—

58. agreed with the Commissioner by the registered person:
59. agreed with the Commissioner by an industry association, if the method is intended by the Commissioner and the industry association to be available to a person such as the registered person:
60. published by the Commissioner and is available to the person in that publication.

61. The method used to calculate the amount that may be deducted on acquisition is set out in subsections (3C) to (3EB), and (3G) to (3M). The rules for calculating adjustments are set out in sections 21 to 21H.

62. In determining the extent to which goods or services are used for making taxable supplies, a person must estimate at the time of acquisition how they intend to use the goods or services, choosing a determination method that provides a fair and reasonable result. The determination is expressed as a percentage of the total use.

63. The extent to which a deduction for input tax is allowed is calculated using the formula—

    $full\; input\; tax\; deduction\; \times \; percentage\; intended\; use.$

    Where:

64. In the formula in subsection (3H),—

65. full input tax deduction is the total amount of input tax on the supply:
66. percentage intended use has the meaning set out in section 21G(1)(b).

67. For a supply to which section 11(1)(m) or (mb) applies, the recipient must,—

68. on acquisition,—
    1. identify the nominal amount of tax (the nominal GST component) that would be chargeable on the value of the supply, as if the value were equal to the consideration charged for the supply, at the rate set out in section 8(1); and
    2. determine the extent to which they intend to use the goods or services as described in subsection (3G); and
    3. determine the amount that is the same proportion of the nominal GST component as the proportion of the use of the goods and services that is non-taxable use; and
    4. attribute as output tax to a taxable period under subsection (4)—
       1. the amount determined under subparagraph (iii); or
       2. the nominal GST component calculated by section 20(3J)(a)(i), if the person intends to apply section 6(3)(e) on disposal of the goods; and
69. for later adjustment periods, make adjustments under the apportionment rules set out in section 21 to 21H in relation to the taxable supply referred to in paragraph (a).

70. Repealed

71. For a supply of remote services to which section 11A(1)(j) or (x) applies, if the recipient of the supply—

72. estimates at the time of acquisition that the percentage intended use of the services is less than 95%, then the recipient must, on acquisition—
    1. identify the nominal amount of tax (the nominal GST component) that would be chargeable on the value of the supply, as if the value were equal to the consideration charged for the supply, at the rate set out in section 8(1); and
    2. based on the percentage intended use of the services, account for output tax under subsection (4) for the proportion of the nominal GST component for any non-taxable use of the services:
73. determines at the end of an adjustment period that the percentage actual use of the services is less than 95%, then the recipient must, at the end of the adjustment period—
    1. identify the nominal GST component that would have been chargeable on the value of the supply, as if the value were equal to the consideration charged for the supply, at the rate set out in section 8(1); and
    2. based on their percentage actual use of the services, account for output tax under subsection (4) for the proportion of the nominal GST component for any non-taxable use of the services:
74. is required to account for output tax under paragraph (a) or (b), then the recipient must, for later adjustment periods, make adjustments under the apportionment rules set out in sections 21 to 21H in relation to the taxable supply referred to in paragraph (a) or (b).

75. For a supply of listed services referred to in section 8C, if an underlying supplier of the listed services has received a flat-rate credit from the operator of the electronic marketplace through which the supply is made and was a registered person at the time of supply, the underlying supplier must account for output tax for the flat-rate credit under subsection (4E).

76. If a registered person who is a non-profit body resident in New Zealand uses goods and services in the course or furtherance of an activity that is not a taxable activity, the goods and services are treated as being used in the course or furtherance of the taxable activity of the registered person—

77. to the extent that the goods and services are not used for the making of exempt supplies; and
78. if the goods and services are not excluded from the effect of this subsection by an election of the registered person under subsection (3KB).

79. If a registered person is a non-profit body resident in New Zealand that carries on an activity that is not a taxable activity and in the course or furtherance of the activity the registered person receives supplies of goods and services, for use solely in relation to the activity and to which subsection (3K) would apply in the absence of this subsection, and the registered person makes an election under this subsection,—

80. the supplies used in the course or furtherance of the activity are excluded from the effect of subsection (3K) after a date (the election date), which must be before 1 April 2021 if the registered person claims a deduction in accordance with section 20(3) and (3K) for supplies used in the course or furtherance of the activity; and
81. each asset used in the activity is treated as being disposed of on the election date in the course or furtherance of the taxable activity and being reacquired on the election date for use in the course or furtherance of an activity that is not a taxable activity.

82. A registered person makes an election under subsection (3KB) for supplies used in relation to an activity by—

83. notifying the Commissioner on or before the election date, in a way acceptable to the Commissioner, of—
    1. the election; and
    2. the election date; and
    3. the information required by the Commissioner relating to the election; and
84. including in a return for the taxable period in which the election date occurs an amount of output tax on the disposal of each asset referred to in subsection (3KB)(b) equal to the tax on a taxable supply having a value equal to the total of—
    1. each amount, which may be estimated using a method acceptable to the Commissioner if adequate records are not available, that affects under subsection (3K) the calculation of the registered person’s input tax before the election date and is included in the cost of the asset; and
    2. each amount arising from the asset, which may be estimated using a method acceptable to the Commissioner if adequate records are not available, that affects under subsection (3K) the calculation of the registered person’s input tax before the election date and is included in the operating costs of the asset in the period of 7 years before the election date.

85. For the purposes of subsection (3), and if subsections (3CB) and (3CC) do not apply, a registered person who is non-resident may deduct input tax as defined in section 3A(1)(a) or (c) to the extent to which the registered person uses the goods and services for, or intends the goods or services for use in, making taxable supplies, treating all the supplies made by the person as if they are made and received in New Zealand.

86. For the purposes of subsection (3), and if subsections (3CB) and (3CC) do not apply, a registered person who is non-resident may deduct input tax as defined in section 3A(1)(b) to the extent to which the goods or services are used for, or intended to be used in, making taxable supplies, treating all supplies made by the person as if they were made and received in New Zealand.

87. Despite subsection (3LB), a registered person who is non-resident may not deduct input tax as defined in section 3A(1)(b) if the imported goods are—

88. supplied to a person (the recipient) who—
    1. is not a registered person; or
    2. is a registered person and the supply is not for use in a taxable activity of the recipient; and
89. outside New Zealand at the time of supply.

90. Despite subsection (3L), a non-resident person who is registered under section 54B and who principally makes supplies of financial services may, for the purposes of calculating the amount of input tax, choose to use a fair and reasonable method of apportionment agreed with the Commissioner, as set out in subsection (3E).

91. For the purposes of subsection (3)(de), the amount of input tax to be deducted by the operator of the electronic marketplace corresponding to the flat-rate credit passed on under section 8C(3)(b)(ii) to the underlying supplier is equal to 8.5% of the value of the supply of the listed services. For the purposes of calculation of the amount under this subsection, the special valuation rule in section 10(7D) is ignored.

92. For the purpose of subsection (3), output tax in relation to a supply made by a registered person must be attributed to a taxable period—

93. in the case of a registered person who is required to account for tax payable on an invoice or a hybrid basis under section 19, if the supply is made or is deemed to be made during the taxable period; or
94. in the case of a registered person who is required to account for tax payable on a payments basis under section 19—
    1. to the extent that payment for the supply has been received during the taxable period, if the supply is a supply of goods and services which is deemed to take place under any one of sections 9(1), 9(3)(a), 9(3)(aa), 9(6), 9(8), 25(2)(a), 25(4) and is not treated by section 8(4B) as being made in New Zealand; or
    2. to the extent that payment for the supply has been made during the taxable period, if the supply is a supply of services that is treated as being made in New Zealand by section 8(4B) together with any one of sections 9(1), 9(3)(a), 9(3)(aa), 9(6), 9(8), 25AA(2)(a) or 25AA(3)(a); or
    3. if the supply of goods and services is made during the taxable period by the registered person and neither of subparagraphs (i) and (ib) applies; or
95. in the case of a registered person who is required to account for tax payable under section 21D(1) and (3)(b) or 21FB(4)(b), for the relevant adjustment period; or
96. in the case of a registered person who elected to return output tax under section 91(3), the taxable period in which the election was made.
97. in the case of a registered person who has chosen under section 19DB(3) to account for output tax on a supply of listed services made through an electronic marketplace, the taxable period in which the person chooses to account for the tax which may be no later than the taxable period that includes the date that is 7 days after the performance of the services is completed.

98. A person who is treated under section 5(23B) as a supplier of goods under section 11(1)(mb) is denied a deduction under subsection (3) in relation to the supply. However, this subsection does not apply to a person required to account for tax under section 5(23B) who is either a registered person or later becomes a registered person and uses the relevant goods for making taxable supplies.

99. For a supply of distantly taxable goods by a non-resident to which section 8(3)(ab) applies or a supply of remote services to which section 8(3)(c) applies, a recipient of the supply is denied a deduction of input tax in relation to the supply unless the recipient has obtained taxable supply information under section 19K(8) or (9).

100. Subsection (4C) does not apply to a supply of distantly taxable goods to which section 8(3)(ab) applies or of remote services, that is treated by section 5B as being made by the recipient, if the recipient has accounted for the output tax charged on the supply.

101. For the purposes of subsection (3JD), an output tax adjustment for the flat-rate credit must be made by the underlying supplier of listed services in a taxable period in which they received the flat-rate credit.

102. If, in relation to any taxable period and any registered person, the total amount that may be deducted under subsection (3) exceeds the aggregate amount of the output tax of that registered person attributable to that taxable period, the amount of the excess shall, subject to this Act, be refunded to that registered person by the Commissioner pursuant to section 46.