Inland Revenue to Process GST Returns for Businesses Affected by Legislative Error

The error, stemming from 2023 changes to GST adjustment rules, has prevented over 350 businesses from claiming GST refunds, totaling approximately $30 million.

Revenue Minister Simon Watts has announced that Inland Revenue can now begin processing GST returns for businesses affected by a historic legislative drafting error. The error, stemming from 2023 changes to GST adjustment rules, has prevented over 350 businesses from claiming GST refunds, totaling approximately $30 million.

The drafting mistake impacts taxpayers who acquired assets before April 2023, making them ineligible for a simplified one-step adjustment calculation when there is a permanent change in the asset’s use.

“This error is causing significant cashflow issues for businesses, particularly during these tough economic times,” said Mr. Watts. “Cabinet has agreed to address the issue through the Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Bill, which had its first reading on 29 August. The bill will have retrospective effect.”

In the meantime, Inland Revenue will process affected GST returns, providing relief to businesses. An Order in Council was signed by the Governor General under section 6D of the Tax Administration Act 1994, allowing a temporary modification of the law until the new legislation is enacted.

“This modification is optional for taxpayers and time-limited, giving businesses the opportunity to claim the GST they are rightfully entitled to,” Mr. Watts added.