Long awaited tidy up rules for GST

Long awaited tidy up rules for GST have been introduced to Parliament.

Also included in the bill are changes to the methods by which a registered personal apportions their initial input tax deduction according to the intended use of the asset.

There are also changes to the definition of "dwelling" to clarify what is a commercial dwelling (and thus susceptible to GST) and what is not.

Other non-GST related changes in the bill include a limitation on the way the $50,000 maximum shortfall penalty for not taking reasonable care or for taking an unacceptable tax position can be used.

At present the provision in the Tax Administration Act applies too broadly and, says the introduction to the bill, "it was never intended that this restriction apply to disclosures made at the time the tax position is taken.

"If this were the case, taxpayers could take tax positions that did not meet the applicable standard knowing the maximum penalty they would face would be a penalty of $50,000.

The maximum penalty is now to apply to a voluntary disclosure made before an audit or an investigation is started and does not apply to any disclosure at the time the tax position is taken.

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