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Goods and Services Tax Act 1985

General provisions

78E: Alteration of agreed price in relation to supply mistakenly believed to be of a going concern

You could also call this:

"Changing the price if a business sale is not a going concern as thought"

If you agree to buy something from a supplier and you both think it is a going concern, the supplier might not charge you tax. This is because the supplier is treating the sale as a zero-rated supply under section 11(1)(m). You and the supplier have a written agreement that says this.

If it turns out the sale is not a going concern, and your agreement does not say what happens if tax is charged, the supplier can increase the price. The supplier can add an amount to the price that is equal to the price multiplied by the tax rate in section 8(1). This means you will have to pay more for the thing you bought.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM85539.

Topics:
Money and consumer rights > TaxesBusiness > Industry rules
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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"

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78F: Liability in relation to supplies of land, or

"Telling the seller about tax when buying land"

Part 11General provisions

78EAlteration of agreed price in relation to supply mistakenly believed to be of a going concern

  1. Where—

  2. a supplier and a recipient agreed, having recorded their agreement in a document, that a supply is the supply of a going concern, and the supplier has accordingly treated the supply as being chargeable with tax at the rate of 0% under section 11(1)(m); and
    1. the contract or agreement for the supply contains no provision for an increase to the agreed price arising in the event that the supply is not a supply that comes within the provisions of section 11(1)(m), or does not otherwise contemplate or provide for the consequences if tax is not chargeable at the rate of 0%; and
      1. the supply does not come within the provisions of section 11(1)(m),—
          1. the supplier may increase the consideration for the supply by an amount equal to the agreed price in the contract or agreement multiplied by a percentage equal to the percentage specified in section 8(1) applicable to that supply.

        Notes
        • Section 78E: substituted, on (applying with respect to supplies made under a contract or agreement entered into on or after 10 April 1995), by section 6(1) of the Goods and Services Tax Amendment Act (No 2) 1995 (1995 No 75).
        • Section 78E(a): amended, on , by section 205 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
        • Section 78E(a): amended, on (applying on and after 10 October 2000), by section 119(1) of the Taxation (GST and Miscellaneous Provisions) Act 2000 (2000 No 39).
        • Section 78E(b): amended, on (applying on and after 10 October 2000), by section 119(1) of the Taxation (GST and Miscellaneous Provisions) Act 2000 (2000 No 39).
        • Section 78E(c): amended, on (applying on and after 10 October 2000), by section 119(1) of the Taxation (GST and Miscellaneous Provisions) Act 2000 (2000 No 39).