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Goods and Services Tax Act 1985

General provisions

78BA: Adjustments to tax payable in relation to supply correction information following change in rate of tax

You could also call this:

"Fixing tax mistakes when tax rates change"

Illustration for Goods and Services Tax Act 1985

If you are a supplier and the tax rate changes, you need to adjust the tax you pay. You do this when you give supply correction information to your customers about a supply you made. You calculate the new tax amount using the new tax rate.

If you are a customer and the tax rate changes, you also need to adjust the tax you pay. You do this when you get supply correction information from your supplier about a supply you received. You calculate the new tax amount using the new tax rate.

To calculate the adjustment, you subtract the original amount from the new amount. Then you multiply the result by the difference between the old and new tax rates, which are calculated according to section 2. The adjustment can be either output tax or input tax, depending on whether it is positive or negative.

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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=DLM85527.

Topics:
Money and consumer rights > Taxes
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Part 11General provisions

78BAAdjustments to tax payable in relation to supply correction information following change in rate of tax

  1. Subject to subsection (6) of section 78B, where—

  2. there is a change in the rate of tax imposed by section 8; and
    1. any registered person (being a supplier) has made an adjustment pursuant to section 78B in respect of any qualifying supply made by that person; and
      1. that registered person subsequently issues supply correction information (in accordance with section 25) in respect of a qualifying supply made for which payment has not been received as at the time of the issue of the supply correction information,—
          1. that registered person shall, in the taxable period in which the supply correction information is issued, adjust the amount of tax payable under section 20 by an amount calculated in accordance with this section.

        1. Where—

        2. there is a change in the rate of tax imposed by section 8; and
          1. any registered person (being a recipient) has made an adjustment pursuant to section 78B in respect of any qualifying supply received by that person; and
            1. that registered person has subsequently, in respect of any qualifying supply,—for which payment has not been made as at the time of the receipt of the supply correction information, or other notice, or knowledge,—
              1. been issued with supply correction information; or
                1. received notice, or otherwise knows that any taxable supply information held is incorrect,—
                  2. that registered person shall, in the taxable period in which the supply correction information or other information or knowledge was received, adjust the amount of tax payable under section 20 by an amount calculated in accordance with this section.

                2. The adjustment required by this section shall be calculated as follows:

                3. subtract from the amount of consideration originally payable to, or, as the case may be, by that registered person the amount of consideration that is now payable to, or, as the case may be, by that registered person:
                  1. multiply the resulting total by an amount equal to the old tax fraction subtracted from the new tax fraction (as respectively calculated in accordance with section 2 immediately before and immediately after the new rate of tax comes into force).

                    1. For the purposes of subsection (1), the amount of the adjustment pursuant to this section shall be deemed to be—

                    2. output tax where the amount of the adjustment is a positive amount; and
                      1. input tax where the amount of the adjustment is a negative amount.

                        1. For the purposes of subsection (2), the amount of the adjustment pursuant to this section shall be deemed to be—

                        2. output tax where the amount of the adjustment is a negative amount; and
                          1. input tax where the amount of the adjustment is a positive amount.

                            Notes
                            • Section 78BA: inserted (with effect on 1 July 1989), on , by section 17(1) of the Goods and Services Tax Amendment Act (No 2) 1989 (1989 No 152).
                            • Section 78BA heading: amended, on , by section 44(1) (and see section 44(4) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section 78BA(1): amended, on , by section 44(2)(c) (and see section 44(4) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section 78BA(1)(c): amended, on , by section 44(2)(a) (and see section 44(4) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section 78BA(1)(c): amended, on , by section 44(2)(b) (and see section 44(4) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section 78BA(2): amended, on , by section 44(3)(d) (and see section 44(4) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section 78BA(2)(c): amended, on , by section 44(3)(c) (and see section 44(4) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section 78BA(2)(c)(i): amended, on , by section 44(3)(a) (and see section 44(4) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section 78BA(2)(c)(ii): amended, on , by section 44(3)(b) (and see section 44(4) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section 78BA(2)(c)(ii): amended, on , by section 204 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).