For the first time in 36 years, GST and invoicing requirements are being modernised to facilitate advances in technology such as e-invoicing. These changes achieved royal assent on March 30, 2022 with the The Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Act 2022. This has been named the licorice allsorts Act because it contains changes across so many areas of tax law. GST features in the title and is indeed a very key part of it. The changes to modernise the GST invoice system will not be coming into effect until April 2023. However, this leaves less than a year for businesses to adapt and make sure their systems are able to comply with these new requirements.

New Terminology

One of the key changes being made to GST invoicing requirements is the introduction of new terminology. The basic concept of an ‘invoice’ and ‘debit / credit notes’ will be replaced with more general concepts as shown in the table below.

Current terminology compared to the new terminology from 1 April 2023:

table showing the new GST invoicing terminology in NZ

This will have an impact on software that was designed to collect and produce valid ‘tax invoices’ in the traditional format, potentially creating initial complications for some organisations.

Taxable supply information

Although the current requirements to ‘issue and hold’ a tax invoice, debit note and credit note have been maintained, they are no longer mandatory and have been extended to allow the provision of information in relation to the supply (taxable supply information) or correction to the supply (supply correction information). We have summarised the taxable supply information (TSI) requirements below.

Taxable supply information (TSI) requirements:

Table showing new record keeping requirements for NZ GST

As seen in the table above, the low-value threshold (where only limited taxable supply information is required) is to be increased from $50 to $200. This is to align with the amount usually authorised for ‘payWave’ transactions.

In addition to the changes shown above, the requirements to hold specified taxable supply information has been extended to both customers and suppliers.

Furthermore, buyer created taxable supply information (currently known as a buyer created taxable invoice) can now be issued upon agreement by both parties, without requiring pre-approval from the Commissioner.

Getting your systems ready

The Chartered Accountants of Australia New Zealand (CAANZ) have commended these changes, stating that “we had previously raised the need for these amendments which bring the GST Act into line with modern business practices.” We also believe that many of these GST changes will support more flexibility between suppliers and customers and help drive a faster and more connected economy. However, now is a good time review your system capabilities to ensure you will be able to manage taxable supply information in non-standard formats from 1 April 2023. Lastly, it’s also important to ensure that staff are trained on the new requirements and that internal policies and terms of trade are updated to ensure they are compliant.

Contact us to organise a review of your accounting software or for more information about the GST changes.

Published in Wellington, NZ on 10 July, 2022.