Friday 8th June 2012 |
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New Zealand businesses would face “effectively a new tax” as a result of the finance and expenditure committee’s tweaks to a tax bill that impose goods and services tax on late fees, account firm PwC says.
The committee has recommended that GST be added to fees for the late payment of an account under the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill. Fees have previously not been subject to GST because they aren't considered part of the goods or services, rather a breach of contract or compensation for damages.
"If passed by parliament this would be a significant change and is effectively a new tax," Eugen Trombitas, a partner at PwC, said in a statement. "By making late fees subject to GST the GST base is shifting away from a value added tax (on goods and services) to a cash-flow tax."
"This will undermine the New Zealand GST model's ‘best in class’ reputation, and will be out of line with best practice overseas," he said. The bill also calls for amendments to be made to the sale of second-hand goods by a non-resident, so that input credits cannot be claimed twice and to prevent liquidators and receivers from switching the basis on which they account for clients’ GST obligations.
BusinessDesk.co.nz
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