INDEPENDENT NEWS

GST rules clarified for non-profit bodies

Published: Tue 15 May 2018 10:22 AM
Hon Stuart Nash
Minister of Revenue
15 May 2018 MEDIA STATEMENT
Revenue Minister Stuart Nash has signalled a law change to clarify GST rules around the sale of assets by non-profit bodies.
“The GST treatment of non-profit organisations differs from other entities,” says Mr Nash.
“Non-profits can register for GST and claim GST refunds on most of their expenses even if their turnover is below the $60,000 threshold for registration. In many cases non-profit bodies do not pay much GST on their activities.
“In turn, when a GST-registered body sells an asset for which it has claimed GST expenses, it must pay GST on the income from the sale. Inland Revenue has applied this rule since GST was first introduced in 1986.
“Revenue officials have recently been advised of a new legal interpretation of this rule which exposes the tax system to substantial potential losses. For the avoidance of doubt, the Government will legislate to clarify the GST rules.
“The new interpretation suggests that where a non-profit body sells an asset that is not connected to a fee-earning activity, the organisation can claim back the GST on the costs relating to that asset, but does not have to pay GST on its sale. This could also be the case if a non-profit body receives an insurance pay-out on an asset, such as a building. An insurance pay-out is treated as a sale for GST purposes.
“The new interpretation is not consistent with the way the GST rules have been applied and understood in the past. If GST expenses have been claimed by a non-profit body in relation to an asset, GST should apply to the asset when it is sold or there is an equivalent event, such as an insurance pay-out.
“The tax system is based on fairness, and being simple and efficient to operate. The new interpretation threatens those principles and the Government will move to restore certainty.
“Inland Revenue has released an issues paper seeking public feedback on the issue. We want to hear from organisations who currently hold affected assets. Non-profit bodies like charities do marvellous work and we recognise their valuable contribution. But fairness applies to all taxpayers,” Mr Nash says.
The proposed new GST rule will apply from 15 May with a savings provision to preserve the tax positions taken by non-profit bodies before that date.
The issues paper is available on the IRD website http://taxpolicy.ird.govt.nz/
The deadline for public submissions is 15 June 2018
http://img.scoop.co.nz/media/pdfs/1805/20180515_Issues_Papergstnonprofitbodies.pdf
ends

Next in New Zealand politics

Government announces new red zone payment
By: New Zealand Government
Gordon Campbell on MPs pay and the REAL p.c. danger zone
By: Gordon Campbell
Emotional day as remains of NZ service people return home
By: New Zealand Government
Commissioner details allocation of 1800 police
By: New Zealand Police
Concern for those in aged care facilities without consent
By: Human Rights Commission
Green leadership stands firm on waka jumping bill at AGM
By: RNZ
New Leadership for The Opportunities Party
By: The Opportunities Party
Gordon Campbell on another reason to loathe HR departments
By: Gordon Campbell
Red Zone payment creates risk for Crown
By: New Zealand National Party
Human Rights Commission backs red zone property offer
By: Human Rights Commission
Red zone bailout is disgraceful
By: New Zealand Taxpayers' Union
PM's Press Conference 20/8/18: MP Pay, Nauru, Antarctica
By: The Scoop Team
MP pay frozen and fairer system for increases developed
By: New Zealand Government
Performance pay for chief executives ended
By: New Zealand Government
Green Party backs pay freeze for MPs
By: Green Party
View as: DESKTOP | MOBILEWe're in BETA! Send Feedback © Scoop Media