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Law change to reduce impact of GST interpretation

Thursday, 19 October 2006

Law change to reduce impact of GST interpretation

The government will introduce legislation to reduce the impact on GST-registered owners of holiday homes, home-stays, farm-stays and serviced apartments of a possible new interpretation of the law by Inland Revenue, Revenue Minister Peter Dunne announced today.

"A draft interpretation of the law issued by Inland Revenue today confirms that holiday homes, home-stays, farm-stays and serviced apartments will not, in most cases, be classified as commercial dwellings and will therefore fall within the exemption from GST for accommodation," Mr Dunne said.

"The draft has been issued for public comment. If the final interpretation is along those lines, the government will introduce a law change that preserves the status quo for owners who had registered for GST, and claimed GST for expenses associated with the accommodation, before the new interpretation is finalised.

"This means they will be able to de-register in the future in accordance with current interpretations of the law and thus postpone any financial consequences that might otherwise arise from the new interpretation.

"Interpretations of the law may change from time to time. Only Parliament, however, can change the law, and I will ask it to do so in this case, to prevent taxpayers who have acted in accordance with an earlier interpretation from being adversely affected by a new one," Mr Dunne said.

ENDS

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