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Goods and Services Tax Act 1985

General provisions

78C: Change in accounting basis coinciding with or occurring after change in rate of tax

You could also call this:

"Changing your tax accounting when tax rates change"

Illustration for Goods and Services Tax Act 1985

If you are a registered person and the tax rate changes, you might need to change how you account for tax. The Commissioner can tell you to change your accounting basis under section 19 or section 19A. This change can happen at the same time as the tax rate change or after it.

When the tax rate changes, you will need to use the new tax rate to work out the tax on your supplies. You do this by using the new tax fraction, which is calculated under section 2, to find the tax on the money you receive for your supplies. The Commissioner's direction to change your accounting basis will start from the beginning of the period when you need to file a Part 2 return.

If the Commissioner tells you to change your accounting basis after the new tax rate starts, you will need to use the new tax rate to work out the tax on your supplies. You will not take into account any adjustments under section 78B when working out the tax. Any money you pay or receive after the change in accounting basis will be considered as money for supplies made or received after the new tax rate starts.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM85529.

Topics:
Money and consumer rights > Taxes
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78BA: Adjustments to tax payable in relation to supply correction information following change in rate of tax, or

"Fixing tax mistakes when tax rates change"

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78D: Liability to pay past tax, etc, not affected by alteration in the law, or

"Changing the law doesn't cancel old taxes or fines you owed before the change"

Part 11General provisions

78CChange in accounting basis coinciding with or occurring after change in rate of tax

  1. Where—

  2. there is a change in the rate of tax imposed by section 8; and
    1. a registered person is required pursuant to section 78A to furnish both a Part 1 return and a Part 2 return for any taxable period during which the new rate of tax comes into force; and
      1. the Commissioner has during that taxable period, at any time before the date on which the new rate of tax comes into force, pursuant to section 19 or section 19A directed the person to change—
        1. from an invoice basis to a payments or a hybrid basis; or
          1. from a payments basis to an invoice or a hybrid basis; or
            1. from a hybrid basis to an invoice or a payments basis—
              2. the provisions of sections 19 to 19C (except section 19B(2)) shall have effect in respect of that registered person as if each of the periods for which a Part 1 return or a Part 2 return is required to be made were a separate taxable period, and the Commissioner's direction shall have effect from the commencement of the period for which a Part 2 return is required to be furnished.

            2. Where the Commissioner directs a change in accounting basis for any registered person pursuant to section 19 or section 19A at any time after a new rate of tax comes into force,—

            3. for the purpose of determining under section 19C the amount of any input tax deducted and output tax accounted for, and any input tax that would have been deducted and output tax that would have been accounted for if the person had been accounting for tax payable on a different basis,—notwithstanding that the supply may have occurred during any taxable period or part of a taxable period occurring before the date on which the new rate came into force; and
              1. the amount of any such input tax in respect of any taxable supply, or any supply of secondhand goods to which section 3A(1)(c) of the input tax definition applies, shall be deemed to be an amount equal to the new tax fraction (being the tax fraction as calculated in accordance with section 2 immediately after the coming into force of the new rate of tax) of the consideration in money for the supply or for the secondhand goods; and
                1. the amount of any such output tax in respect of any taxable supply shall be deemed to be an amount equal to that new tax fraction of the consideration in money for the supply,—
                2. for the purpose of determining the amount of any such input or output tax deducted or accounted for, or that would have been deducted or accounted for, no account shall be taken of the amount of any adjustment under section 78B; and
                  1. any payments that are made or received by that registered person after that change in accounting basis shall be deemed, notwithstanding any other provision of this Act, to be consideration for a supply made or received by that registered person on or after the date on which the new rate of tax comes into force, and the amount of any input tax or output tax in respect of any such supply shall accordingly be determined on the basis of the new rate of tax.

                    Notes
                    • Section 78C: inserted, on , by section 23 of the Finance Act 1989 (1989 No 13).
                    • Section 78C(1): amended, on , by section 7(2)(a) of the Goods and Services Tax Amendment Act 1991 (1991 No 11).
                    • Section 78C(1)(c): substituted, on , by section 7(1) of the Goods and Services Tax Amendment Act 1991 (1991 No 11).
                    • Section 78C(2): amended, on , by section 7(2)(b) of the Goods and Services Tax Amendment Act 1991 (1991 No 11).
                    • Section 78C(2)(a): amended, on , by section 7(2)(c) of the Goods and Services Tax Amendment Act 1991 (1991 No 11).
                    • Section 78C(2)(a)(i): amended, on (applying on and after 10 October 2000), by section 118(1) of the Taxation (GST and Miscellaneous Provisions) Act 2000 (2000 No 39).
                    • Section 78C(2)(b): amended (with effect on 1 July 1989), on , by section 18(1) of the Goods and Services Tax Amendment Act (No 2) 1989 (1989 No 152).
                    • Section 78C(2)(c): added (with effect on 1 July 1989), on , by section 18(2) of the Goods and Services Tax Amendment Act (No 2) 1989 (1989 No 152).