This week, the Government introduced the Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Bill (the Bill). The Bill includes a number of high profile tax measures that we highlight in our previous article here, but also provides for remedial changes to various GST issues.
This newsletter contains a high-level summary of the changes that every GST-registered business, and many that are not, should be aware of.
Joint Ventures
The current legal position is that an unincorporated joint venture is generally treated as a separate GST registered person which claims and returns GST as if it were a legal entity such as a company. Some joint ventures adopt a different position in practice, whereby each participant sells the produce of the venture and returns GST separately by each participant. The proposed changes will allow for greater flexibility around the approach to GST for joint ventures and their participants and provide legislative blessing for the practice noted above.
Under the proposal, there will be two categories of joint ventures for GST purposes:
| Category | Default position under the Bill | Election? |
| Output-sharing JV | Flow-through by default. | Not required |
| Ordinary JV (all other joint ventures) | Separate registration by default. | May opt in to flow-through by unanimous election (if eligible). |
Joint venturers that currently each sell product from the joint venture independently are treated by default as falling under the first category. Other joint ventures may opt-in to adopt that approach.
Output-sharing joint venture participants will also claim GST credits for expenditure by the joint venture, by reference to their own cost sharing ratios.
The proposed rules include several supporting measures. A notable measure is zero rating rules for the transfer of joint venture property to a new or existing joint venturer. This new rule mirrors the current treatment of the transfer of land where both parties are GST registered.
The proposed rules are to take effect on 1 April 2026. However:
- existing joint ventures under which GST was returned by each participant will have their previous GST positions validated, subject to certain requirements; and
- joint ventures that are already GST registered and wish to transition to the Output-Sharing model will have until 1 April 2027 for their application to be backdated to 1 April 2026.
All joint ventures should be assessing their GST position, checking historical GST returns and determining whether an election under the new rules is required or desirable.
Digital nomads – optional GST relief
There has been a general policy shift towards making New Zealand more assessable for so-called ‘digital nomads’ (including special visas). GST changes are proposed to allow administrative relief for digital nomads. The changes seek to ensure digital nomads can provide services from New Zealand to an offshore client without triggering a need to register for GST. Under the current rules, GST registration would be required because such services are ‘zero-rated’, and zero-rated supplies count towards the NZ$60,000 threshold at which registration becomes mandatory.
Business to business (B2B) zero rating changes
The B2B zero rating rules allow certain financial service providers to treat their financial services as zero-rated, which allows for GST credits to be claimed. Previously, this required approval from the Inland Revenue Department (IRD), but this has been relaxed to allow a financial provider to make the election by taking the relevant position in their GST return. This change has been expanded to also allow any financial service provider to elect into the rules by giving notice to IRD.
Land sales as separate supplies
Under the current rules, commercial land that is sold with a dwelling (such as a farm) is treated as two supplies, and the dwelling will usually be exempt from GST.
The Bill proposes extending this to any land that is used for a partially exempt purpose, even if there is no dwelling on the land. This avoids the need to apply complicated adjustment rules because of that sale. An example of such land could be a church that also has a shop selling donated goods (which are exempt from GST).
Other remedial items
Some miscellaneous changes that may be of interest to readers include:
- clarification as to which supplies are covered by ‘shared tax invoices’ (these are invoices issued by a group of non-associated parties, usually for administrative ease);
- relief for new GST registered persons that inadvertently select a GST filing frequency that was not intended;
- a GST exemption on imported goods that have been inherited;
- record keeping rules for zero-rated land transactions;
- tax invoices valued at NZ$1,000 or more to customers that are not GST registered will no longer require details of the recipient (i.e. address, name, phone number etc);
- confirming that second hand goods GST credits are available to a purchaser that becomes GST registered after the purchase; and
- further clarity to a recent GST change that allows certain private assets (such as homes) to be sold without any GST liability. These changes focus on the permitted GST credits that can be claimed and to what extent the asset was used for making taxable supplies to enable that exemption.
While some of these GST changes are welcome, many GST issues remain that require clarification or reform. There may be further substantial technical GST changes in future amending legislation.
The Bill is expected to have royal assent at some point before the end of March 2026, with most GST measures applying from 1 April 2026.
If you have any questions about this article, please get in touch with the contacts listed or your usual Bell Gully adviser.
Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
