GST changes clear up bach rules

Some family baches have been inadvertently caught in the GST net since April 1, 2011.

The institute said that of particular concern was a sole trader who also rented out their family bach for short-term accommodation.

Under current rules, they are required to return 3/23 of the sale price as GST to IRD. Those who carry on business through a company would not need to do so. Government’s proposed amendments will fix this.

“We raised concerns that the effects of the 2011 changes were unintended,” said the institute’s acting tax general manager, Jolayne Trim.

The Officials’ Issues Paperon GST remedial issues suggests giving people the option to take the bach out of their taxable activity. The option would apply where the supplies relating to the bach are under $60,000.

“We consider the proposals to be a good solution. They’ll correct the over-reach of the 2011 changes and it will allow sole traders the ability to opt out of the GST rules with regard to their bach, if it was never intended to be included.”

It is hoped that the changes will be legislated for in 2013.