Neutrality Efficiency Certainty and Effectiveness Fiscal simplicity and impact Land in New Land outside New Compliance Administration Zealand Zealand fairness* Option 1: Decrease - No change - No change - No change - IRD Decrease - Increase - GST Increase – businesses monitors taxpayers’ increases applies evenly revenue Supplies to residents Supplies to residents Broadening the Treatment of New Possible competitive would apply a compliance with the uncertainty of to consumption increase of the test Zealand and overseas advantage for New new test, which (as with other business’ in New Zealand. forecast at $4 businesses should be Zealand businesses is not expected tax rules). obligations. GST does not million per equivalent. performing services in to significantly to annum. New Zealand. alter compliance Cost from updating Guidance on consumption costs from the products and intended effect outside New Supplies to current test. communicating would help Zealand. Supplies to non-residents Possible competitive Treatment of New changes. mitigate this advantage for Zealand and overseas uncertainty. businesses businesses should be performing services equivalent. outside New Zealand. Meets objective objective Meets objective Meets objective Meets objective Meets objective Option 2: Status No change - No change - No change - No change - IRD No change No change - No change. – businesses monitors taxpayers’ businesses would non-residents Supplies to residents Supplies to residents quo Treatment of New Possible competitive continue to compliance with the apply a receive more Zealand and overseas advantage for New apply current rules (as with other longstanding test. favourable businesses should be Zealand businesses test. tax rules). treatment of equivalent. performing services in Currently little some New Zealand. guidance on consumption in application to New Zealand. Supplies to services, than Supplies to non-residents Treatment of New Treatment of New legal services. Residents’ Zealand and overseas Zealand and overseas consumption businesses should be businesses should be outside New equivalent. equivalent. Zealand is taxed. Meets objective Meets objective Meets objective Meets objective Meets objective Does not meet objective * = Key objective
Neutrality Efficiency Certainty and simplicity Effectiveness and fairness* Fiscal impact Land in New Zealand Land outside New Zealand Compliance Administration Option 1: Broadening the of the test Decrease - Supplies to residents Treatment of New Zealand and overseas businesses should be equivalent. Supplies to Possible competitive advantage for businesses performing services outside New Zealand. No change - Supplies to residents Possible competitive advantage for New Zealand businesses performing services in New Zealand. Supplies to non-residents Treatment of New Zealand and overseas businesses should be equivalent. No change - businesses would apply a new test, which is not expected to significantly alter compliance costs from the current test. No change - IRD monitors taxpayers’ compliance with the (as with other tax rules). Cost from updating products and communicating changes. Decrease - increases uncertainty of business’ obligations. Guidance on intended effect would help mitigate this uncertainty. Increase - GST applies evenly to consumption in New Zealand. GST does not to consumption outside New Zealand. Increase – revenue increase forecast at $4 million per annum. Meets objective objective Meets objective Meets objective Meets objective Meets objective Option 2: Status quo No change - Supplies to residents Treatment of New Zealand and overseas businesses should be equivalent. Supplies to Treatment of New Zealand and overseas businesses should be equivalent. No change - Supplies to residents Possible competitive advantage for New Zealand businesses performing services in New Zealand. Supplies to non-residents Treatment of New Zealand and overseas businesses should be equivalent. No change - businesses continue to apply current test. No change - IRD monitors taxpayers’ compliance with the rules (as with other tax rules). No change – businesses would apply a longstanding test. Currently little guidance on application to services, than legal services. No change - non-residents receive more favourable treatment of some consumption in New Zealand. Residents’ consumption outside New Zealand is taxed. No change. Meets objective Meets objective Meets objective Meets objective Meets objective Does not meet objective * = Key objective