What does the GST rate change mean for consumers?
The rate of GST is increasing from 12.5% to 15% from 1 October 2010.
Working for Families Tax Credits, NZ Superannuation and all the main related benefits will be increased from 1 October 2010 to compensate for the GST increase.
However, the new rate of GST may affect the prices you pay for goods and services because individual businesses can determine how much of the 2.5% increase is passed on.
As a general rule, if you have been invoiced, or have paid for goods or services provided before 1 October 2010, the price will include GST at a rate of 12.5%.
There are some exceptions though:
Hire Purchases
If you sign a hire purchase agreement:
-
on or before 30 September 2010, you will be charged GST at 12.5%
-
on or after 1 October 2010, you will be charged GST at 15%
Lay-bys
If you put an item on lay-by, the GST on the purchase depends on when you make your final payment. If you make your final payment:
- on or before 30 September 2010, you will be charged GST at 12.5%
- on or after 1 October 2010, you will be charged GST at 15%
Progress Payments
GST payable on progress payments depends on:
- when the payment is due
- when the invoice is issued, or
- when the payment is received
For example, you employ a builder and pay progress payments for his work. If on, or before 30 September 2010:
- progress payments are due to the builder
- you pay a progress payment to the builder, or
- the builder issues you an invoice for a progress payment
Then GST will be charged at 12.5%. Otherwise GST of 15% is due.
If you enter into a purchase situation not covered here, it is a good idea to check with the supplier how the GST rate change will be treated.
Go to the Inland Revenue website for more on what the GST rate change will mean for consumers.
This publication is intended to raise your awareness of some of the issue as a result of the GST rate increase. It is not intended to give you detailed or specific advice as it has been written in general terms only. This publication should not be relied upon to provide specific information without also obtaining appropriate professional advice after detailed examination of your particular situation.
