Current Rules

A legislative charge is a liability under legislation to pay money and includes fees and levies. Common examples include fees paid to govt agencies for the renewal of a license and registration. Other charges include charges where there is an obvious connection between the supply and the consideration for that supply.

GST treatment of these legislative charges can be unclear, and the current approach lacks transparency and has created an inconsistent and incoherent application of GST to legislative charges.

Proposed Amendments

The amendments propose to introduce rules that will provide for the GST treatment of charges payable under legislation in NZ. The key features of the proposal include:

• A new rule which provides that charges payable under legislation are treated as consideration for a supply of goods and services.
• GST registered persons and the commissioner of IRD will not be able to amend historic returns in a way that is inconsistent with the amendments.
• Some existing deeming provisions will be repealed and replaced with the proposed amendments

Exceptions

Fines, penalties, interest and general taxes will not be treated as consideration for a supply of goods and services under the amendments.

Effective Date

The changes will be effective for any legislative changes that come into force or are amended after 1 July 2023 and all other legislative charges from 1 July 2026. This means there is a three-year transitional period.

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