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GST and Body Corporates

Minister of Revenue Todd McClay has announced the Government’s intention to amend the GST Act to confirm that Body Corporates will not be required to register for GST and file returns.  The Government’s view is that this will align Body Corporates with the rules for other residential property owners.  For more information see http://taxpolicy.ird.govt.nz/news/2014-06-06-govt-seeks-feedback-proposals-clarify-gst-treatment-bodies-corporate#statement.

The proposal has not met with universal approval. Commentators have noted that the proposal is inconsistent the outcome of the review of the relevant  law undertaken by the IRD’s chief tax counsel and released more than a year ago.  This review arrived at the “preliminary but considered” position that body corporates are legally separate entities from their owners; and that accordingly the levies paid represent consideration for services supplied and that supplying the services satisfies the tests of a taxable activity. See http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11269391

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