GST decision avoids carbon-fuelled headaches
Government GST decision avoids carbon-fuelled headaches
“The Government should be thanked for its pragmatic and timely solution to the GST treatment of emissions units,” said the Tax Director of the Institute of Chartered Accountants, Craig Macalister, today.
The initial proposal was to subject emissions units to GST in full, which would have led to many complications.
The decision to zero-rate transactions involving emissions units for GST purposes (whether New Zealand units or other Kyoto compliant units) is a pragmatic and sensible solution, Mr Macalister said.
“To subject emissions units to GST would have meant carbon-fuelled headaches, more boring paper work and increased compliance costs for business,” Mr Macalister said. “It is the sort of pragmatism shown in this decision that the Institute has long advocated and the Government and its advisers deserve credit for this refreshing approach.”
Previously, the legislation was sitting in a taxation bill that is not likely to be passed in time for the introduction of emissions trading. By putting the GST treatment in the Climate Change (Emissions Trading and Renewable Preferences) Act, it will be in place as of 1 January 2009.
Julia Hoare, PricewaterhouseCooper’s Climate Change Partner, and former Chair of the Institute’s National Tax Committee, supported the Institute’s view adding that “The Government deserves credit for getting the GST treatment resolved this quickly. Because GST is a transactions tax, people needed to understand the GST treatment as early as possible.”