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When is a tax invoice not a tax invoice?

When is a tax invoice not one? From 1 April 2023 when it instead becomes “taxable supply information” under recent changes to the GST legislation.

If you are GST registered, you need to know that the rules that set out the information you need to provide to your customers will change from that date, as will the information you need to hold in order to claim GST on your expenses.

If this is news to you, you are not alone. In a recent survey of attendees at a GST webinar, around half of the attendees responded to a poll question and indicated that they were unaware of these changes.

There have not been any significant changes to the legislation for invoicing and documentation since GST was introduced in 1985, in contrast to the vast improvements to technology and business systems. The current changes to move GST invoicing requirements into the digital era and to have them better reflect current business practices is welcomed and severely overdue.

Under the new rules there is a much greater degree of freedom in the way in which the GST relevant information can be shared and recorded by the parties. This caters in part for the move towards e-invoicing which does away with the issue of a paper invoice, or even the delivery of an electronic invoice document – hence the need to modernise the tax invoice rules.

Some of the practical changes to the specifics regarding the information required to be shown on invoices (or provided electronically) by the supplier are:

For supplies under $200, only the name and registration of the supplier, the date of the supply, a description of the goods and services and the consideration for the supply are required;

  • For supplies between $200 and $1,000, the information also needs to include either the amount of GST charges or a statement that the amount includes GST;
  • For supplies over $1,000 it is no longer a requirement to show the address of the recipient, other identifying information such as a telephone number, email address or website address are sufficient if the actual address is not available;
  • There are also similar changes to the requirements for debit and credit notes, which now will become known as supply correction information.

Following initial submissions the lawmakers have been mindful to ensure that a business that is issuing a valid GST tax invoice now would not have to make any changes to comply with the new rules, which will be a relief to many businesses. But if you are looking to change your invoicing systems or processes, or perhaps you know that you are not currently compliant, the new framework should be easier to comply with in many respects.

Review your accounts

Even if you make no changes in your invoicing processes after 1 April 2023, you are likely to need to review your accounts payable GST processes. After 1 April 2023, the fact that a supplier’s invoice does not have the words “tax invoice” on it does not mean that it is not a valid document that can form part of the evidence to support your GST claim.

Changes that are in effect now

We have also seen some very common sense changes to other aspects of the tax invoicing rules, and these are in effect now:

You no longer need to retain a tax invoice to support your GST claimed on expenses, but you do need to retain information to show the amount of GST paid on the supplies, and from 1 April 2023 you need to hold the taxable supply information for the supply;

Purchasers of goods and services who issue buyer created tax invoices, rather than receiving tax invoices from the supplier of the goods and services, will welcome the change to no longer require Inland Revenue approval to issue these. They will still need to show that there has been agreement between the parties to use the process.

You no longer need to state “copy only” on a second copy of a tax invoice issued to a customer, and it is no longer a punishable offence to issue two tax invoices for the same supply;

Changes to the GST group rules to allow a single member of the GST group to issue tax invoices on behalf of all members.

This is only a small snapshot of the changes to the GST invoicing rules, space does not permit me to cover them all in this article. Please reach out to your accountant or tax adviser to discuss what the changes mean for your business.

Related: An alternative approach to the Budget

Andrea Scatchard
Andrea Scatchard
Andrea Scatchard is a Tax Partner at Deloitte, based in the Bay of Plenty. She can be contacted on ascatchard@deloitte.co.nz

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