GST recordkeeping is getting easier 

Modernised GST rules for recordkeeping apply from 1 April 2023.

Recent GST reforms resulted in simplified GST recordkeeping requirements that will apply from 1 April 2023 to reduce compliance cost, accommodate electronic recordkeeping and facilitate the introduction of e-invoicing. The reforms are permissive to enable practises and systems that comply with the current rules to also be compliant with the new less prescriptive rules.

The current recordkeeping requirements will be replaced with a requirement to retain a minimum set of information in relation to the supply. The new rules allow the registered person to determine the form and manner of creating, providing and retaining supply information as part of their normal recordkeeping processes.

This article includes an overview of the modernised GST rules, taxable supply information requirements based on the value of the goods and services and concludes with practical considerations for practitioners to ensure that their systems and procedures will be compatible with the new rules. It will also take you through an overview of specific taxable supply information requirements for certain imported goods or services, second hand goods, members of a GST group or a supplier group and supplies of distantly taxable goods, as well as a discussion of the new requirements relating to supplier groups, GST groups, shared tax invoices and buyer-created tax invoices.

A tax invoice will be referred to as “taxable supply information”, a debit and credit note will be referred to as “supply correction information” and a buyer-created tax invoice will be referred to as “buyer-created taxable supply information”.

Modernised GST rules

As part of the modernisation process, certain terms which we have become accustomed to over the years will be changing. A tax invoice will be referred to as “taxable supply information”, a debit and credit note will be referred to as “supply correction information” and a buyer-created tax invoice will be referred to as “buyer-created taxable supply information”.

To avoid having to update or reissue commercial documents and Inland Revenue publications, a reference in documents to a tax invoice is to be read as a reference to taxable supply information. Similarly, a reference to a credit or debit note is to be read as a reference to supply correction information.

Two new terms, “supply information” and “taxable supply information”, will be introduced. “Supply information” will refer to the information requirements for invoices not exceeding $200 (see requirements in the table below). “Taxable supply information” will refer to the minimum set of information buyers and sellers need to keep as evidence of a transaction.

The taxable supply information does not have to be included in a single physical document. It can be included in tax invoices or information held in other forms, such as supplier agreements, contracts and bank statements.

The taxable supply information requirements depend on the value of the supply and the type of the supply. The taxable supply information requirements for different types of supplies are discussed in Part 2 of this article. The taxable supply information requirements based on the value of the supply can be summarised as follows –

Taxable supply information based on the value of the goods or services

 

Value of the taxable supply Information required
Not exceeding $200
  • The name and registration number of the supplier.
  • The date of the supply.
  • A description of the goods or services.
  • The amount of the consideration for the supply.
The four requirements above will collectively be referred to as “supply information”.
Exceeding $200 but not $1,000
  • The supply information for the supply (see above).
A statement that the amount of consideration includes tax charged for the supply or a statement of the amount of tax charged for the supply.
Exceeding $1,000
  • The name and registration number of the supplier.
  • Recipient details (see definition below) for the recipient.
  • Physical address of the recipient, if available and if not already included in recipient details.
  • The date of the supply.
  • A description of the goods or services.
  • For tax charged on the supply, either:
  • the amount of the consideration for the supply and a statement that the amount includes a charge in respect of GST; or
the total amount of tax charged for the supply, the consideration for the supply excluding the tax and the consideration for the supply including the tax.


“Recipient details” is defined to include the name of the recipient and one or more of a physical address, telephone number, email address, trading name other than the name of the recipient, a New Zealand business number or a Uniform Resource Locator address for a website.

The taxable supply information requirements no longer require details relating to the quantity or volume of the supply is no longer required since, due to modern inventory and sales systems, this information is included in business records.

In keeping with commercial and contract law, an invoice must still be issued to notify the recipient of their obligation to make payment. However, the invoice no longer needs to include the words “tax invoice” in a prominent place.

For supplies over $200, GST registered suppliers will have to be able to provide GST registered buyers the taxable supply information within 28 days of a request for the taxable supply information (or an alternative date agreed to by the parties).

For supplies less than $200, GST registered suppliers are required to keep a record of the supply without having to provide taxable supply information.

Supply correction information must be provided when the taxable supply information included an incorrect amount of GST or when the seller has included an incorrect GST amount in their GST return. Buyers and sellers must retain supply correction information with all the following details –

  • The seller’s name (or trade name) and GST number.
  • The date the correction was provided.
  • Information identifying the taxable supply information (for example, an invoice number).
  • The correction to the taxable supply information including, if relevant, a correction to the amount of tax charged for the supply.

Practical system considerations

In preparation for the 1 April 2023 effective date, accounting systems and procedures should be reviewed and modified to ensure that it will be compatible with the new modernised GST rules. The preparation work should include the training of finance staff on the new taxable supply requirements. In addition, consideration should be given to the updating of internal policies and procedures and the terms of trade conditions. Accounting systems will have to be updated to accommodate, amongst others, the new invoicing requirements for both invoices issued and invoices received from suppliers, the increase in low value threshold from $50 to $200 and different customer and supplier information that will be available due to the new taxable supply information requirements. While reviewing current systems and procedures, it will be prudent to also make provision for the anticipated evolvement of e-invoicing.

With 19 offices nationwide, BDO New Zealand is one of the country’s largest and leading providers of professional tax services. We are backed by the BDO Global Network, one of the world’s largest global networks. Contact a tax advisor at your local BDO office to discuss any questions you might have relating to the modernised GST rules.