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GST relief for bach owners at Christmas

Media Release

20 December 2012

GST relief for bach owners at Christmas

NZICA is pleased to see that the Inland Revenue is suggesting a pragmatic solution to the GST treatment of holiday homes. Some family baches have been inadvertently caught in the GST net since 1 April 2011.

Of particular concern was a sole trader who also rented out their family bach for short term accommodation. Under current rules, they are required to return 3/23 of the sale price as GST to IRD. Those who carry on business through a company would not need to do so. The proposed amendments will fix this anomaly.

“We raised concerns that the effects of the 2011 changes were unintended,” says Acting Tax General Manager Jolayne Trim.

The Officials’ Issues Paper – released yesterday – on GST remedial issues suggests giving people the option to take the bach out of their taxable activity. The option would apply where the supplies relating to the bach are under $60,000.

“We consider the proposals to be a good solution. They’ll correct the over- reach of the 2011 changes and it will allow sole traders the ability to opt out of the GST rules with regard to their bach, if it was never intended to be included.”

It is hoped that the changes will be legislated for in 2013.

Other proposals in the issues paper include changes to exclude land from the scope of hire purchase agreements for GST purposes and to ensure the GST apportionment rules apply to all entity types.

ENDS

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