Inland Revenue has issued a public statement with regard to issues being faced by New Zealand businesses who are facing challenges in exporting their products to Australia as a result of the COVID-19 pandemic.
Usually a supply of goods exported within 28 days of the “time of supply” is zero-rated for GST purposes. This means GST is applied at the rate of 0% and is therefore free of New Zealand GST.
The “time of supply” is the date the product is either ordered or paid for by the customer, whichever date is earlier.
There are no real trade restrictions due to the Covid-19 pandemic with regard to the supply of goods across the New Zealand border. However, there have been some logistical issues in getting the product from the supplier out of the country as a result of New Zealand being in lockdown.
Under New Zealand legislation the Commissioner of Inland Revenue has a discretion to extend the 28 day period if there are circumstances beyond the control of the exporter and importer which prevents the goods from being exported within that 28 day timeframe. There is further dispensation where it is not practicable for the exporter to export the goods.
These grounds already exist in the New Zealand GST legislation and have not been introduced as a result of the Coronavirus situation. It is usually required to file an application to Inland Revenue to get an extension on the 28 day requirement.
However Inland Revenue has advised that if the delay is a result of the COVID-19 situation they will allow a three-month extension to the existing 28 day period for the export to be made without the need to file a special application. That means exporters will have a further 3 months over and above the 28 day period provided for under the normal rules.
If a further extension is required then an application should be filed in the normal way. We can assist with that.
These will be considered on a case-by-case basis by Inland Revenue. They will be looking for grounds that are beyond the control of the exporter which prevents the goods from being exported within the initial three-month extension period. For that reason you need to keep records to justify any further extension.
This new extension includes all supplies of goods up to and including 31 July 2020.
You can give us a call on 1300 791 600 for a quick chat.
The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.