- Hon Simon Watts
Inland Revenue can begin processing GST returns for businesses affected by a historic legislative drafting error, Revenue Minister Simon Watts says.
"Inland Revenue has become aware of a legislative drafting error in the GST adjustment rules after changes were made in 2023 which were meant to simplify the process. This error prevents taxpayers who acquired an asset before April 2023 from using the simplified one-step adjustment calculation when there was a permanent change of use for that asset.
"At a time when things are tough, this error is preventing Inland Revenue from paying out GST refunds to more than 350 taxpayers, totalling approximately $30 million."
Cabinet has agreed to a proposal to remedy this problem which has been included in the Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Bill which had its first reading on 29 August. This will have retrospective effect.
"The Government wants to ensure that they can claim back GST they are rightfully entitled to. Legislation takes time to be enacted, and we are aware that this drafting error is causing significant cashflow problems for businesses who were counting on receiving that money," Mr Watts says.
"Cabinet has therefore agreed to allow Inland Revenue to process GST returns for affected businesses in the interim until that bill becomes law. I recommended an Order in Council be made to put that into effect and that was signed by the Governor General yesterday."
The Order in Council was made under section 6D of the Tax Administration 1994 which allows the application of the law to be modified in these circumstances. The modification would be time-limited and optional for taxpayers to apply.
