New Zealand's FEC recommends GST changes to the Taxation Bill

New Zealand's new Taxation Bill included areas of focus regarding the GST collection obligations on electronic marketplaces that facilitate accommodation and transportation services. However, before these proposed measures can take effect, they must first be reviewed and reported on by the Finance and Expenditure Committee (FEC). 

Now, over six months after the initial proposal, the FEC has published the report's result and recommendations for moving forward. The report presented several recommendations and proposed amendments regarding GST measures and platform economy. Here are the key highlights of the most recent reports on how the bill is expected to change. 

New Zealand's Taxation Bill: An overview

New Zealand's "Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill" was first proposed on 30 August 2022. Before the most recent recommendations from the Finance and Expenditure Committee (FEC) on 2 March 2023, the bill included but was not limited to the following tax-related measures: 

• Updated information reporting requirements for gig and sharing economy digital platform operators.
• Implementing goods and services tax (GST) collection on electronic transportation and accommodation marketplaces. 

The following recommendations were made on the GST collection obligations on electronic transportation and accommodation marketplaces. 

Updated information reporting requirements for platforms

As initially proposed, there will be information collection obligations for platform operators facilitating the provision of short-term accommodation and personal services. These obligations will take effect from 1 January 2024 (for reporting to Inland Revenue in early 2025).

Additional recommendations include mention to platform operators facilitating the sale of goods and vehicle rentals. These operators will be brought into the reporting framework at a future date by an Order in Council (within three years of the bill being passed). This is to align New Zealand's implementation of these extended reporting rules with that of other countries, specifically within the EU. 

FEC recommendations on GST and the platform economy

One of the most significant recommendations made by the FEC is regarding the proposed GST measures and platform economy. Initially, the proposed measures stated the intent to start imposing goods and services tax (GST) collection obligations on electronic marketplaces that facilitate accommodation and transportation services. However, the FEC recommends the following: 

Provision of GST details:

The Inland Revenue must provide the GST registration details of primary suppliers to the electronic marketplace operators. Doing so will ensure the GST input tax credit works as intended. 

The opt-out process

The proposed measures initially required agreement with the marketplace operator. New recommendations, however, state that underlying suppliers with sales of NZ$500,000 or more in any 12-month period through electronic marketplaces can unilaterally opt out of these rules and continue paying GST (and claiming input credits) directly.

Large-scale accommodation facilitators and platforms have also been provided with an optional opt-out. The opt-out threshold will apply in the event that they have 2,000 or more nights per year available on at least one electronic marketplace. This could prove challenging when using multiple platforms, and the number of nights offered on some platforms is less than 2,000. The opt-out can also be applied on an aggregate basis – at a group level if multiple group entities provide accommodation.

Navigate new requirements with ease and certainty with VAT made simple

Tracking and monitoring multiple electronic marketplaces is time-consuming as-is. Don't let new GST obligations complicate the process. Stay updated with all the latest VAT-related news and how it affects your business.

Need help to find what you're looking for? No worries. Contact one of our experts directly; we'll help you navigate even the trickiest corners of your tax reclaim landscape.