Zero-rated supplies

Some supplies are zero-rated for GST and taxed at 0%. Restraint of trade Any

payment you receive in return for not conducting a taxable activity outside New Zealand is zero-rated.

To be a zero-rated supply, the above conditions for zero-rating must be satisfied at the time of settlement of the transaction. If any of these conditions are not satisfied at the time of settlement, the supply will be taxed at 15%. Refer to www.ird.govt.nz (key words: zero rated)

Internet sales

 

A registered New Zealand-owned entity that sells goods or services through the internet to customers in New Zealand will charge GST at the usual rate. But, a New Zealand-owned entity that sells goods or services through the internet to overseas buyers will generally charge GST at 0%. We expect sellers to take reasonable steps to check where the customer lives and where the goods or services are going.

 

Sale of a going concern

 

A going concern is a business sold "lock, stock and barrel" or is part of a business that can operate independently. The business must be a going concern at the time of sale, right up to the time of the transfer to the buyer. A supply of goods or services must meet these criteria to be a going concern: • It must be the supply of the whole or stand-alone part of a taxable activity, from one registered person to another.

- It must be the supply of all the necessary goods and services for the activity to continue.

- Both parties must agree in writing that there is a supply of a going concern.

- Both parties must intend the activity is capable of being carried on as a going concern by the buyer. The sale is zero-rated for GST if it meets all these criteria.

- It must be the supply of all the necessary goods and services for the activity to continue.

The sale is zero-rated for GST if it meets all these criteria.

Example Pat, a dairy farmer, sells his dairy farm (including land, herd, all buildings and all machinery) to another GST-registered farmer. This qualifies as the sale of a going concern, if both parties agree. If Pat had sold the land and buildings but kept the machinery and the herd, it would not qualify as a going concern. The sale of the land and buildings may still be zero-rated, see Land transactions. But, if he'd sold parts of the farm that could have been operated separately as a going concern, the sale would be zero-rated.

Land transactions

 

A GST-registered person must zero rate a supply, if the supply wholly or partly includes land, and:

• is made to another registered person, and

• the recipient acquires the goods with the intention of using them for making taxable supplies, and

• it is not intended to be used as a principal place of residence by the recipient or a relative of the recipient.

• convalescent homes, nursing homes, rest homes or hospice

• camping grounds

• other commercial dwellings.

Not eligible for zero-rating

 

Services performed in New Zealand for a third party Services performed under contract to a non-resident who lives outside New Zealand, which are delivered to a third party in New Zealand, and where it is reasonably foreseeable at the time the contract is entered into the services will not be received by the third party in the course of making taxable or exempt supplies, are not eligible for zero-rating. GST is charged at the standard rate of 15% if supplied to nonresidents, but the supply is received in New Zealand.

Example A Singaporean family wants their child to receive a year's education in New Zealand. The parents contract a New Zealand school to supply the tuition. The supply of the tuition is not zero-rated because the child will receive the tuition in New Zealand, and it was reasonably foreseeable at the time the contract was entered into that the child will not receive the tuition in the course of making taxable or exempt supplies.

 

Example A non-resident tour operator buys accommodation from New Zealand hotels and puts them into travel packages for tours of New Zealand. The travel packages are then sold to non-resident tourists. The supply of accommodation contracted between New Zealand hotels and the non-resident tour operator isn't zero-rated because it's reasonably foreseeable another person (the non-resident tourist) will receive the services in New Zealand, and will not receive the accommodation in the course of making taxable or exempt supplies