Moves to cut GST compliance costs

Changes have been introduced to a bill currently before Parliament to cut compliance costs around the upcoming GST rate change.

Revenue Minister Peter Dunne said the GST transitional measures in the Bill largely focus on contracts that straddle the October 1 rate change date.

Certain successive supplies, such as insurance, finance leases and lay-by contracts that straddle the date will be able to continue at the 12.5% rate for a transitional period to reduce compliance costs. The transitional periods will vary for the type of supply.

There are also measures to better align the GST time of supply rules with business practices.

A further provision extends the remission of late payment penalties and the associated interest for GST returns to cover the period immediately before October 1.

Also included in the supplementary order paper is the  repeal of fund withdrawal tax.

Dunne says there were significant compliance costs associated with phasing this out.

"Accordingly, from 1 April 2011 we have decided to repeal fund withdrawal tax."

The repeal of fund withdrawal tax will apply for all superannuation fund withdrawals from 1 April 2011. Measures set out in Budget 2010 for complying with the requirement to track contributions will no longer be required. Instead, Inland Revenue will monitor salary arrangements entered into until 1 April 2011.

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