GST issues paper

On 24 February, Inland Revenue released an Officials’ Issues Paper seeking feedback on various GST issues.

A long-standing rulethat has proved a source of frustration for those affected applies to transfers of goods between associated persons. The issue is highlighted in the following example. Joe buys a block of land on the edge of town from a third party.

Neither the vendor,nor Joe, are GST registered, i.e. GST does not apply. Joe holds the land for a number of years and due to urban expansion, the opportunity arises to subdivide the block into 6 lots for sale. Joe incorporates a company to complete the subdivision and sells the land to the company.