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Goods and Services Tax Act 1985

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

26A: Factored debts

You could also call this:

"Selling debts and how it affects your taxes"

Illustration for Goods and Services Tax Act 1985

When you sell a debt to someone else during a taxable period, this law applies to you if you are a registered person and you have to account for tax payable on a payments basis. You are treated as making a taxable supply when you sell the debt. The tax you charge is a fraction of the debt's remaining book value.

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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=DLM84327.

Topics:
Money and consumer rights > Taxes
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"Marketplace operators can claim back tax on bad debts for unpaid goods or services."

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26B: Resale royalties, or

"Tax on money artists get when their work is resold"

Part 3Returns and payment of tax
Calculation of tax payable: deductions, apportionment, other adjustments

26AFactored debts

  1. This section applies to a registered person who—

  2. sells a debt to another person during a taxable period; and
    1. is required to account for tax payable on a payments basis.

      1. The sale of the debt is treated as being a taxable supply—

      2. that is made by the registered person during the taxable period; and
        1. on which the amount of tax charged is the tax fraction of the remaining book value of the debt.

          Notes
          • Section 26A: substituted, on , by section 158 of the Taxation (Base Maintenance and Miscellaneous Provisions) Act 2005 (2005 No 79).